Salary Packaging

[mowog]

The back Story

I work for an IT company who has what I see as terrible salary packaging options... As in the only thing they offer is Novated Leasing.

My daughter just started a new job and she showed me her salary packaging options which are extensive to say the least... Things like

Up to $5000 for entertainment can be packaged
Up to $9000 for general expenses can be packaged

Rent, Home loan's, phone, car. and the list goes on...

She is working for a non profit organisation... For some reason their employees get better access to packaging options.

Is there anyone out there who works for a private company that is providing a good level of salary packaging?

[gcg2503]

Mate

It is always the case that these guys get better salary packaging

and so they should as they are usually working for lower paying professions and not for profit orgs & key workers like nurses etc

FBT exempt

[mowog]

For her age and the fact that she is in a non skilled job she is getting a very good hourly rate. She is also a qualified beauty therapist with qualifications in remedial massage as well, and this unskilled job pays a higher hourly rate.

It is strange days it would seem women don't want to look good any more because jobs in the beauty field are drying up.

[Pinch]

Non profit organisations are 'Rebateable' organisations. They get a 48.5% reduction in the FBT they have to pay. FBT is usually 48.5% itself too. So, the organisation only pays 51.5% of what other companies pay. Mathematically this works out at about a max FBT rate of 25% - less than most people's lower income tax rate of 31.5% (tax + Medicare levy).

Salary packaging non-concessional items like rent, entertainment etc is taxed at the full FBT rate in non-rebateable organisations (most private companies and government employers). This means those items are taxed MORE than your usual income tax, hence why they are not offerred by private companies.

Laptops used to be treated concessionally (ie the full FBT rate was not applied, even to private organisations), but this has now been removed. This is why laptops are not really salary sacrificed by anyone anymore.

Novated leasing is one of the last 'concessional' FBT items. The tax paid is still based on how many k's you do. Under 15k a year and its generally more expensive than the 31.5% income tax rate, 15-30 is slightly more beneficial, 30-40 is less tax again, and over 40 is the lowest tax rate.

Talk is to remove this concession too and tax the FBT value of novated leases at the the full FBT rate, thereby largely killing novated leasing and the subsequent effect on the motor industry. I hope they come to their senses before that though.

[mowog]

That is one of the most clear explanations I have seen... Thanks for that...

So what is there that employers can do to add value?

I was a contractor for many years and in my last year as a contractor I paid less tax that I did as salaried employee and my contract rate was 40% higher than my current salary.

There are a number of issues with my current employer so I am headed back to the world of IT contacting.

[devilcv8]

And for novated leases the amounts actually are
Less than 15,000 26%
15,000 to 24,999 20%
25,000 to 40,000 11%
Over 40,000 7%

From http://www.ato.gov.au/businesses/con....htm&page=4&H4
always better to check the actual figures