Financial Advice for Salary Packaging

Discover how you can salary sacrifice and improve your financial future.

How Does Salary Packaging Work?

According to the ASIC’s MoneySmart, salary packaging is “when you arrange to receive less income after tax, in return for your employer paying for benefits out of your pre-tax salary.” Essentially, this can reduce your taxable income and you may pay less income tax.

The benefits you can access through salary packaging are dependent on the industry and/or business type that employs you. Benefits can include (but are not limited to):

  • a car, car loan, or other personal loans
  • computer, software, or tools needed to perform your job
  • super contributions
  • other personal expenses or everyday expenses

Your employer may have to pay fringe benefits tax (FBT) on some of these benefits, as defined by the Australian Taxation Office (ATO).

You will need to arrange your salary package before you get paid (you can’t package your salary after you’ve earned it) and is usually effective for people on middle to high incomes. We recommend seeking professional advice to work out if salary packaging is right for you.

Who can offer salary packaging?

While salary packaging is more common in certain industries, technically, any employer can let their employees access these benefits. In industries like a not-for-profit (NFP), charities, public health, and private education, salary packaging can be more common as providers have access to a wider variety of benefits. For example, if you work at an NFP, you may be able to access additional benefits like payments towards school fees, mortgage payments, or utility bills.

Other business or employer types, including Government departments, agencies, and private or corporate companies, are still able to access plenty of advantages for total remuneration packaging.

Speak to Our Experienced Financial Advisors in Adelaide for Salary Packaging Options To Optimise Your Income

If you have the opportunity to salary package, consider seeking personal financial advice so you can take full advantage of the salary packaging benefits available to you.

Our Adelaide financial advisers can help you enjoy tax savings and gain a better understanding of how your gross salary and after-tax income will be affected.

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Understanding Salary Sacrificing

Salary packaging and salary sacrificing are often incorrectly interpreted as one and the same. However, there are some differences: salary sacrificing is an optional action that you can choose to take, while salary packaging has to be offered to you by your employer.

To salary sacrifice involves making voluntary superannuation contributions to your super fund using your before-tax income. Salary sacrificed super contributions are taxed at 15% which, for most people, is less than their marginal rate. You can talk to your employer about setting up a salary sacrifice agreement.

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Budgeting & Cashflow Management

As part of your overall salary packaging strategy, it’s important to have a budget that gives you an overview of your spending habits and clarity around all your living expenses.

Seek professional advice from Prominent Financial Services for cashflow or salary sacrifice arrangements. Our financial adviser can help you make decisions around reducing your income tax and how you can optimise your pre-tax dollars and make the most of other salary packaging benefits.

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Debt Reduction Strategies

Many people choose to use their salary package opportunity to reduce their debts, whether that is their mortgage repayments, car repayments, or other personal loans.

Reducing debt is a very common life goal, as it can help you move forward with your savings and other financial goals. Whether you have a mortgage, car loan, or credit card debt, a financial adviser can help you build a personal debt management plan to get in control of your debt.

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