Australian taxation office salary sacrifice

The key to tax-effective salary sacrifice is for the employee to take some of their remuneration in the form of concessionally taxed benefits instead of taking it all as fully assessable salary.

To encourage people to work for charities, such as InLife, the Australian Tax Office ATO allows eligible staff to receive an additional part of their salary tax-free. This amount is on top of your usual tax-free threshold so you pay less tax. Instead, the ATO wants to know you spent the money on goods or services that contributed to the economy. That's where salary packaging comes in. Salary packaging lets you trade part of your pre-tax wages for benefits of a similar value.

Australian taxation office salary sacrifice

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To encourage people to work for charities, such as InLife, the Australian Tax Office ATO allows eligible staff to receive an additional part of their salary tax-free. Looking for advice on salary sacrificing?

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A salary sacrifice arrangement refers to an arrangement between an employer and employee whereby the employee agrees to forego part of their future salary or wage in return for some other form of non-cash benefits of equivalent cost to the employer. The Australian Taxation Office ATO treats 'effective salary sacrificing arrangements' and 'ineffective salary sacrificing arrangements' differently. To be an effective salary sacrifice arrangement, it must:. Under an ineffective salary sacrifice arrangement, the amount sacrificed is treated as salary or wages and payroll tax is payable on the total wage or salary. If the benefit provided is exempt from fringe benefits tax FBT , such as a laptop that is provided primarily for work purposes, no payroll tax is payable in respect of the amount sacrificed for that benefit. Payroll tax is payable only on a reduced salary on which the employee pays income tax. Some employees agree to make regular donations to charitable organisations of their choice under a workplace giving program. Payroll tax is payable on the normal gross salary.

Australian taxation office salary sacrifice

However, when it comes to salary sacrifice and taxes, the opposite is true. Sacrificing a portion of your salary can actually be an excellent way to gain an advantage on your tax bill. But before you make any decisions, you need to understand the ins and outs of this strategy, including the potential benefits and drawbacks. Generally, the ATO states that there is no restriction on the benefits you can receive from a salary sacrifice arrangement as long as your employer agrees. Some common benefits that you can obtain through a salary sacrifice agreement include the following:. While salary packaging can benefit employees, there are a few reasons why an employer may choose not to offer this option. One reason is the administrative burden that comes with managing salary packaging arrangements. Another reason is the cost of providing certain benefits, particularly those that require your employer to pay Fringe Benefits Tax FBT.

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Access to the Student Tax Software will be made available to registered students at the applicable time, later in the course. Looking for advice on salary sacrificing? For purchasing dine-in meals at most bistros, cafes, hotels and restaurants. What are you looking for? The employee on higher marginal tax rates will have higher savings. Close modal. We'd love to stay connected Sign-up to receive our newsletter we hate spam too, so we'll never share your details. SPL Students who receive any portion of their fee refunded, will be also be deactivated from the Learning Management System immediately. In fact, for most Australians, we're just around the block! The aim of salary packaging is to enable an employee to receive a combination of income and benefits in a tax-effective manner. Salary packaging is considered a Fringe Benefit, so you need to spend your allowance between 1 April and 31 March, rather than the traditional 1 July to 30 June tax year. Gift cards will only be paid to the student named on registration and are not transferable or cannot be paid in cash or via any other method. Join our team Home Join our team What is salary packaging? Sign up now at gosalary. You can receive your money in one of two ways: contributions to a pre-paid card ie.

The majority of us would have thought about giving something up.

Sharing any of your login credentials for our Learning Management System or the student tax software, is a not allowed. Points to note: Motor cars are subject to FBT but have concessional rates according to private use Expenses such as school fees, personal expenses and mortgage payments attract Fringe Benefits Tax which is based on the top marginal rate of tax. Positions are available for Tax Season , which successful applicants will be advised of in June and are subject to availability across our network of over offices. Students already registered in participating locations will not be eligible for the special offer retrospectively. For your nearest office call 13 23 On this page: How does salary packaging work? Then they calculate the tax on the remaining wages ie. Withdrawn students will continue to have access to all the content available on the Online Learning Management Platform until June 30, More human service, more personal attention, and most importantly, more on your tax refund. Looking for advice on salary sacrificing? For the employer, packaging has some advantages such as the ability to attract employees. Spend your allowance by 31 March. That's where salary packaging comes in.