Salary Packaging

For some reason, salary packaging (or Salary Sacrificing as it is sometimes known) remains one of the best kept secrets in financial planning.

Introduced by the Federal Government several years ago, it remains a mystery to many people and even some financial planners seem to under-appreciate what it can do for their clients.

Salary packaging can save the average wage earner thousands of dollars every year, yet because of the complexities involved in setting it up, only a relatively small percentage of people take advantage of it.

What's the bottom line with Salary Packaging?

So what's it all about? Salary Packaging is a government approved way to save more of your income. What it means is you are able to reduce your taxable income by paying for the eligible items (what are called "packaged items") with pre-tax dollars.

Normally your employer would pay you by way of a cash salary after tax had been deducted. Then you would pay for your expenses such as home loan repayments, rents, household utilities, a motor vehicle, lease payments and running costs, maybe a laptop computer, and a mobile phone, all from your after tax salary.

What's in it for employees?

With salary packaging, you can restructure your salary by choosing to take a percentage of your salary in cash and then "package" approved items or benefits to be paid out of your pre-tax salary.  You receive part of your salary, or remuneration in the form of taxable benefits, and part in after-tax cash salary.

So your gross income is the same but by reducing your taxable income you pay less tax.  That means you get more and the government takes less.  Different guidelines apply to different organisations so you will need to clarify your eligibility.  We can help you do this as well.

Benefits for Employers

Offering Salary Packaging makes good sense for employers.  More and more employers of choice in Australia are making it available to staff resulting in a greater sense of value and therefore more loyalty and contentment.  By employing an outside provider the costs to employers are virtually nil yet employees appreciate the benefit and accredit their employer.

Getting Good Advice

There are strict guidelines for different employer groups as to what items can be packaged.  To package anything more than superannuation it is wise to seek independent financial advice.  Many organisations require you to gain independent advice as a safeguard both to employees and to the organisation. Depending on your employer, you may be able to package quite a number of useful items.

Home loan repayments, rents, household utilities, motor vehicles including running expenses, superannuation, laptop computers and personal travel are all eligible items to package in some instances. The actual amount of money you can save could easily add up to several thousand dollars every year.

David Wilkins and his team at ABN AMRO Morgans specialise in Salary Packaging.  We are available to answer all your questions including what you can package and implementing your salary package.

How does the process work?

Most organisations that offer Salary Packaging require staff to obtain independent Financial Advice when packaging anything more than Superannuation.  There are companies who specialise in the actual facilitation of packaging systems, while the role of the independent Financial Advisor is purely to help determine the level of commitment and benefit required to make salary packaging worthwhile for an individual.

A Typical Process
1. Employees attend a presentation on Salary Packaging or contact us by phone/email.
2. Employee talks with Financial Advisor regarding eligible packaging items.
3. Items are selected by employee.
4. ABN AMRO Morgans calculates the actual financial benefit and impact.
5. Paper work is completed by ABN AMRO Morgans staff and forwarded to the client for checking and signing.
6. All forms are returned to ABN AMRO Morgans who then forward these to the packaging provider.
7. Employee's package starts within a few weeks.

Request More Information

Phone:             (07) 3808 7588
Fax:                  (07 3808 7633
Email:              Contact David Wilkins Here.
Website:         http://www.davidwilkins.com.au

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