Salary packaging is when you and your employer ‘package’ your salary into income and benefits.
It’s also known as salary sacrifice and it’s a smart way to make the most out of your pre-tax income.
Salary Packaging uses your gross income (your pre-tax earnings) for payments to help you maximise your money. Due to the fact that you will use your pre-tax earnings; your taxable income is lowered therefore increasing your take-home pay, allowing you to save more!
In Australia, salary packaging isn’t just limited to novated car leases; it can also be applied to a wide range of other services and expenses. It’s important to remember that these salary packaging options and inclusions are all dependent on your employer.
Salary packaging can be applied to:
- Mortgage repayments
- Utility bills
- Meals and entertainment
Is there a maximum amount you can salary package you ask? Yes. The maximum amount you can contribute from your pre-tax salary depends on the type of employer you work for. This is known as the Fringe Benefits Tax (FBT) limit, cap or threshold. You will pay FBT on any amount over this limit.
To be eligible for salary packaging;
- You must be a permanent full-time employee; or
- A permanent part-time employee; or
- A temporary employee with a contract with at least three months duration
If you are interested in finding out how you can salary package your vehicle with a novated lease, get in touch with one of our friendly experts for advice today!
Contact us here or call us on 1300 738 601.
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