User Tools

Site Tools


edadmin:salarypackaging

salary packaging for public hospital employees

introduction

  • if an employer provides non-salary benefits, these are called Fringe Benefits, and usually the employer will have to pay a tax on these called Fringe Benefits Tax (FBT)
  • certain not-for-profit organisations such as public hospitals, private not-for-profit hospitals or Public Benevolent Institutes (PBIs) are exempt from paying FBT for certain items.
  • abuse or ignorance relating to these restrictions may lead to investigation for fraudulent practices by one of, or more - professional registration board, ATO, employer or police as has recently occurred in WA.
  • the main purpose of these exempt items is to assist these organisations in being able to competitively attract staff from the private sector, while at the same time providing some spending stimulus to pubs and restaurants which suffered with the introduction of GST and then with the recession.

items that you could normally tax deduct anyway

  • the main advantage of salary packaging these is to get the tax rebate up front instead of waiting until tax return as been placed, or in the case of depreciable items, the several years it takes to depreciate them.
  • briefcase, PDA, laptop
  • disability income protection insurance
  • professional membership fees and subscriptions
  • professional development expenses including related travel expense

general living expenses

  • these are capped to a FBT-free threshold which means you can package up to $17,000 grossed-up without having to pay any FBT. This equates to $9,095 in credit card repayments or whatever.
  • personally, it is easiest and simplest just to submit evidence of credit card repayments of at least $9,095
  • some may wish to go the more complicated route and have other expenses paid for them for cash flow reasons such as:
    • mortgage or loan repayments
    • rent
    • other expenses
  • EVERYONE should make the most of this option, and it applies to EACH employer you work for in a FBT year (starts April 1st).

superannuation

  • see superannuation for details
  • you can have pre-tax monies paid into your superannuation fund up to the maximum set by the ATO and you only pay 15% tax on these contributions instead of you usual marginal tax rate of 30-45%.
  • currently (Oct 2009) this maximum is set at:
    • if you are under 50 years of age, the cap is $25,000 per financial year (1 July to 30 June).
    • if you are over 50, you can package up to $50,000 per financial year.
    • these limits include the amount that your employer contributes to super on your behalf.
    • if you exceed these limits, your contributions will be taxed at 31.5% on top of the 15% superannuation contributions tax paid at the time of packaging.
  • everyone should consider this option.

meals and entertainment

  • essentially this allows you to pay for all restaurant meals with friends and family in pre-tax dollars saving you considerable amounts of money each year.
  • if you eat out, then this is a no-brainer!

travel and entertainment

  • a new eligibility includes certain travel related expenses even if unrelated to conferences or professional development
  • includes:
    • airline lounge memberships
      • but for you alone, not your family
      • not only do you pay in pre-tax money but you should get the GST component removed as your employer can get a credit for that.
    • accommodation
      • for any eligible accommodation rental since April 1st, 2008
      • the rental must be used primarily to accommodate your immediate family (non-family members may stay as guests but not if they stayed in a separate room)
      • the expense must be paid by you or your legal spouse
      • the expense must be for an entire unit of accommodation
        • if you share the cost of renting a unit of holiday accommodation with another person, you cannot package ANY portion of the expense.
      • everyone staying in the holiday accommodation must be on holiday - ie. not paid as working as part of their employment
      • the costs must be for accommodation only - thus excludes phone bills, mini bar, movie hire, golfing packages
      • You must provide original tax invoices/receipts and proof of payment when you submit your claim.
      • excludes ship cruise cabins
    • taxi to and from work
      • not sure how they decided on adding this one, but it's there and may be handy for those unable to drive temporarily
    • venue hire
      • includes entire reception centre or function room for weddings, marquee, an entire boat for a social event, an entire corporate box
      • you cannot be reimbursed for chair hire at a function if that chair hire is on a separate invoice
      • you cannot charter a fishing boat for your family if the costs include items not necessary for the operation of the boat such as meals, fishing equipment hire, and fishing guide services

novated car lease

  • a rather complex item - best you discuss with your salary packaging advisor and accountant
  • in general, you need to drive at least 15,000km per year to make this option worthwhile (I think)
edadmin/salarypackaging.txt · Last modified: 2010/02/05 16:23 (external edit)