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  1. #1
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    Default Salary sacrificing??

    ive just started working at a not-for-profit health company and they offer salary sacrificing.
    As I understand it, you send a portion of your pay to the ss company lowering your taxable income and therefore paying less tax and having more money per pay check.

    I have some questions though. While this sounds great, I'm sceptical. Firstly, how is this ok? Why does the ATO say this is ok? I owe them tax, where does this come from?
    Secondly, what does this ss company get out of it? Why would a company just help us to get more money...what are the benefits to them?

    It sounds good but I'm not sure I understand it completely.

    Thanks

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    TheGooch is offline Winner 2014 - Newbie of the Year
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    Default Salary sacrificing??

    Perfectly OK. I've been doing it for years. First it was rent and bills, then for ages my mortgage and now it's a personal loan.
    Mine is reduced by my personal use company car but it's still a bit!
    I also make the most of the meal / entertainment card and the venue costs to put money away for holidays.
    I don't know the why or how it's ok with the ATO but I assure you it is.
    Be careful though if you receive some Centrelink benefits or have a HELP/HECS debt. I'd chat to your accountant for specific advice

    ETA usually you pay a fee to the salary packaging company. We pay $10 per pay or something like that. I think that's what they get out of it!

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    Salary sacrificing is entirely legal and is a way to make pre-tax payments for payment of various approved debts (eg: mortgage) and for (eg) payments in to superannuation funds, therefore lowering your taxable income. You don't have to do it through a salary sacrificing company though...some larger employers simply make the arrangements for you.

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    Perfectly legit but what you can sacrifice varies from company to company. My mil works in the public health system and she can salary sacrifice heaps of stuff. I work for state gov and can only use a car lease, private health and one other thing.

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    It also adds to your income estimate so although your paying less tax centre link will count a portion of it as income.

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    Default Salary sacrificing??

    Salary sacrificing was introduced as it's a way for not-for-profit companies to compete with the private sector for staff- they simply can't afford the wages private companies can so it's an incentive for staff to work for them.
    SS companies charge a fee for their service- depends on the company it can be an annual fee or a fortnightly fee.
    There's a whole range of set-ups depending on the company- we used to have a card and was limited in what we could purchase but now we are with a company who simply deposits our sacrificed pay back into a bank account to use as we wish.

    In regards to centrelink It won't affect payments- things like FTB- but can in regards to child support and HECS debt it can catch you out.
    Last edited by Little Miss Sunshine; 01-07-2016 at 06:41.

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    Default Salary sacrificing??

    Totally legal and the only way some of us can afford to work in the NFP sector! As LMS said, NFP's have to be able to compete with the commercial sector during recruitment so it balances out.. I work for a NFP and as I'll never get a bonus or financial incentive based on performance the tax benefits really help. It's actually not that much if you do the math. Fringe benefits equate to about an extra $5k a year and the meal/entertainments just been capped at $2.5k.

    In my last organisation I think I paid $20pm to be a part of the scheme with a third party. Was totally worth it.

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    My partner works NFP and no way would he be doing it if it weren't for salary sacrificing.
    We sacrifice $16000 for rent. $2500 for eating out, a few thousand for travel and $2000 for catering. There are a few more little things I can't recall.
    It's completely legit and allows the NFP sector to be competitive.


 

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