andrew63

What does this mean exactly to your take home?
Eg: If you were on $70,000 without it and $70,000 with it, what would the difference in take home be?
I am going for a job with a lower salary but they say you are allowed to "salary sacrifice". What can you sacrifice?
Anyone?

Andrew

NickyP

It is not a straighforward question as the rules with salary sacrificing are complicated and vary depending on item and company. We salary sacrifice for a novated lease on a car and may well do the same for a lap top later on. It makes a difference to take home pay and the car tax relief basically pays for us running it which is fine. The downside is that Ian's super payments are calculated after the novated lease is taken out so he is in effect saving less towards his pension.
I can't give you figures but it generally helps if you are close to a tax band so that the salary sacrificing takes you down to a lower band.
Good luck.
Nicky

Swerv-o

It means that you can offset your pre-tax income against large purchases, which the company buys, and then you pay them back out of your salary. It's a pain in the arse though, as some companies have different rules about what you can and can't sacrifice towards from your salary. Some companies don't do it at all. I think all companies are required to allow you to sacrifice into your super.

Effectively it means that you can reduce your marginal income rate by the amount that you sacrifice, so that you can move to a lower tax threshold. Some people swear by it, others curse it. $70k is a long way from the previous tax bracket though, and I imagine you would have to sacrifice quite a lot to make any real difference to your tax banding, unless you had investment income that forces you above the next band, which is at $75k.

A chap I work with had a novated lease with a company that then made him redundant. he ended up having to pay out a small fortune to end the lease, and in tax, after he started his current job on a higher wage...

See an accountant when you arrive is the best plan...

S

ianandhelena

is this related to salary sacrificing in relation to your super fund?

ozzieeagle

No totally different concepts, one is to save for your retirment, and one is for goods and services and interest that you can claim for today.

In someways they are similar in as much as your taxable income gets reduced, but the super issue, is only redeemable on retirement.

IE: my wife salary sacrifices as her employer, the Government hospital system is exempt from certain areas of tax, which she can claim under their employment umbrella. We are able to claim, interest on our mortgage because of this. This year it looks like she will be able to claim upto 11,000 per annum on "entertainment" which involves her allocating a certain amount to be deducted "pre tax" towards an enterainment specific debit card. What this means in essence is she can/we can (as spouses get a card as well) can put aside an amount each fortnight pre tax towards eating and drinking out. We are going to allocate 100 dollars per fortnight, which means that part of her income will be reduced, thus saving circa 40 cents in the dollar on that amount.


If there is a portion of credit on the card at the end of the year we get that amount less 40 pct tax.

If we were to go out with a large group of people, and pay on our card, and get those people to give us their portion of the bill. that portion we get back would have be increased by 40pct in our pocket as the tax dept would have taken it before the tax benefit.

hawk2005

I went to a presentation by a financial consultant the other day - she was talking about a govt change which means that after you are 55 you can start paying as much as you can afford into your super (she used the term salary sacrificing) & getting a tax advantage on income earned for this whilst also drawing on that super & paying a lower amount of tax on this as well.

andrew63

Thanks all.
I know what slary sacrificing is just unsure whaat it means for your take home pay.
The job is also for the Govt Health Dept. so this may be useful.
So it appears there are no hard and fast rules as to what can be sacrificed?
I also don't know what the tax bands are (any links anyone?)
So you can sacrifice and try and move yourself down to the next band so you pay less tax? That sounds OK.

Andrew

steve99

Here's the link from the ATO website for the individual tax rates:
http://www.ato.gov.au/individuals/co...u=5053&mfp=001

The link looks a bit "iffy"! so if it doesnt work go to www.ato.gov.au and then into For Individuals in the top left and then in the drop down you'll see the link to the rates.

There's also some info in the Fringe benefits section on Salary Packaging which might be useful.
Steve

renth

Salary sacrificing for cars can be dodgy.

Our HR department say if you can afford to buy the car outright it's the best option. You can end up towards the end of the financial year realising you need to drive a few thousand kilometers to avoid fringe benefits tax, so you end up in this crazy situation of driving round and round to burn up some Ks for this reason. Crazy.

This relates to my place of work but may be of interest:

http://www.hr.uwa.edu.au/page/95455

Swerv-o

A lot of car lease schemes also have a nasty balloon payment at the end to.

S

ozzieeagle

Yes and best used with a Mortgage IMO.

ozzieeagle

BTW, I'd love to know peoples opinons on Salary Sacrificing, Entertainment, Eating and drinking out. As the main aim of the game is to end up with less cost, Do you think SS for entertainment would end up saving or costing you ?

I'm really unsure about it.

andrew63

Reading the ATO site, it seems that you or you employer pays 45%FBT on such items. If your employer pays it then you are quids in!
I really don't understand it at all but that's how it looks.

Andrew

NKSK version 2

Why the hell the ATO produces such complex rules is beyond me.

I don't consider myself completely thick but tax in this country is just a complete hotch-potch.

As soon as I see threads or articles on things like salary-sacrificing I jump on them hoping to be enlightened but have singularly failed to find anything which helps me understand what the hell is going on.

ozzieeagle

Ahh what I mean is "just because the benefit is there" would you spend more than you would have o'wise.

I think we would, but whether it would be 40 - 45 pct more I'm not sure.


More of a personal situation question than anything else, However I think that most people would end up spending more than they would have, if entertainment is a benefit.