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Salary Sacrifice - Help!!!!!

Salary Sacrifice - Help!!!!!

Old Mar 11th 2007, 12:07 am
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Default Salary Sacrifice - Help!!!!!

I'm trying to get my head around salary sacrifice.

EG if you can sacrifice say $15k to get a company car does this comes off your gross salary? In other words are you then only taxed on the net (after sacrifice) salary left?

Any help appreciated.

Craig
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Old Mar 11th 2007, 12:16 am
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Default Re: Salary Sacrifice - Help!!!!!

Originally Posted by Haley & Craig View Post
I'm trying to get my head around salary sacrifice.

EG if you can sacrifice say $15k to get a company car does this comes off your gross salary? In other words are you then only taxed on the net (after sacrifice) salary left?

Any help appreciated.

Craig
With cars you normally end up with a "novated lease". A company buys the car for you (or buys your existing one). They also give you a card to buy fuel with, pay for rego, servicing etc. You tell them how many miles you are likely to do and they then tell you what monthly payment you will need to make. The amount gives them a profit but means you only pay them the net of tax amount.
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Old Mar 11th 2007, 12:20 am
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Default Re: Salary Sacrifice - Help!!!!!

Hi Craig
With salary sacrifice It would usually be from your gross but your employer may have set up your award differently so you need to confirm with them
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Old Mar 11th 2007, 6:38 am
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Default Re: Salary Sacrifice - Help!!!!!

Originally Posted by Haley & Craig View Post
I'm trying to get my head around salary sacrifice.

EG if you can sacrifice say $15k to get a company car does this comes off your gross salary? In other words are you then only taxed on the net (after sacrifice) salary left?

Any help appreciated.

Craig
Thanks for the replys, I bothered to look up the ATO website (probably what I should have done in the 1st place) and you do only pay tax on your net salary after the dedution of an approved sacrifice.


Craig
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Old Mar 11th 2007, 6:57 am
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Default Re: Salary Sacrifice - Help!!!!!

But with something like a car, you may also end up liable for fringe benefits tax. So you get taxed for having had the advantage of getting the salary sacrifice bit pre tax. The FBT is lower than normal income tax and is also influenced by factors like distance. Mine is less if I do 25000 kms a year (I think). Less again for 40k (or something).
Cheers,

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Old Mar 11th 2007, 7:22 am
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Default Re: Salary Sacrifice - Help!!!!!

Originally Posted by DagBoy View Post
But with something like a car, you may also end up liable for fringe benefits tax. So you get taxed for having had the advantage of getting the salary sacrifice bit pre tax. The FBT is lower than normal income tax and is also influenced by factors like distance. Mine is less if I do 25000 kms a year (I think). Less again for 40k (or something).
Cheers,

DagBoy
Thats right but with my firm they include this cost in the sacrifice so no more to pay.

Ta for reply

Craig
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Old Mar 12th 2007, 2:09 am
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Default Re: Salary Sacrifice - Help!!!!!

Originally Posted by Haley & Craig View Post
Thats right but with my firm they include this cost in the sacrifice so no more to pay.

Ta for reply

Craig
You might want to confirm the details of that. I get an amount a month that is put towards the Novated Lease (it is done differently now, but I am still on an old scheme). A certain amount of FBT is covered, but I chose a more expensive vehicle, so FBT is more. Fortunately, the amount that goes out each month covers the lease and the serveiceing etc. and also has always covered FBT, but a colleague had a more expensive car and did fewer kms and was up for an FBT bill once a year.

Cheers,

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Old Mar 12th 2007, 9:38 am
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Default Re: Salary Sacrifice - Help!!!!!

FBT is payable by employers, not by employees.

However, the arrangement with the employer might be that the FBT paid by the employer is deducted from the employee's gross pay, so the cost to the employer is neutral ...

Best regards.
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