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Salary sacrificing.

Salary sacrificing.

Old Apr 18th 2007, 8:00 am
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Default Salary sacrificing.

Hello all.

Can anyone shed some light on this potentially complicated subject?

I had heard that you can salary sacrifice for certain things, like a company car, extra super payments etc. We have just had some fact sheet through from Alan Collet and it mentions on there salary sacrificing for relocation costs.

Has anyone done this, or know how it works?

I have a job lined up to start when we arrive in Melbourne in October and wondered if I can make use of this for our relocation costs?

Thanks.
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Old Apr 18th 2007, 8:05 am
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Default Re: Salary sacrificing.

Originally Posted by Techno Freak View Post
Hello all.

Can anyone shed some light on this potentially complicated subject?

I had heard that you can salary sacrifice for certain things, like a company car, extra super payments etc. We have just had some fact sheet through from Alan Collet and it mentions on there salary sacrificing for relocation costs.

Has anyone done this, or know how it works?

I have a job lined up to start when we arrive in Melbourne in October and wondered if I can make use of this for our relocation costs?

Thanks.
Not going to even try and explain it... . We put all our allowance into the mortgage so helps pay it off sooner in theory if we don't cheat. We went to a financial advisor, which you have to do anyway intitially in QLD Health to set it up anyway... strangely enough she was from Yorkshire. Here's the QLD sites if they help you at all.

See http://www.qsuper.qld.gov.au/document/IB05.pdf

http://www.remserv.com.au/WhatIsSP/WhatIsSP.htm
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Old Apr 18th 2007, 9:16 am
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Default Re: Salary sacrificing.

Originally Posted by annqldau View Post
Not going to even try and explain it... . We put all our allowance into the mortgage so helps pay it off sooner in theory if we don't cheat. We went to a financial advisor, which you have to do anyway intitially in QLD Health to set it up anyway... strangely enough she was from Yorkshire. Here's the QLD sites if they help you at all.

See http://www.qsuper.qld.gov.au/document/IB05.pdf

http://www.remserv.com.au/WhatIsSP/WhatIsSP.htm
Thanks for the links - very interesting stuff. I kind of realised that's how it worked, I was just wondering hoe it could be related to relocation costs?

The fact you can salary sacrifice for mortgage payments is superb. How does that work? Can you make your entire mortgage payment via this method, or is it only allowed for 'overpayments' if you will. i.e.. do you have to tell the tax people what your standard mortgage payments are and then anything above that you can pay via salary sacrifice?

Thanks.
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Old Apr 18th 2007, 10:13 am
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Default Re: Salary sacrificing.

Originally Posted by Techno Freak View Post

The fact you can salary sacrifice for mortgage payments is superb. How does that work? Can you make your entire mortgage payment via this method, or is it only allowed for 'overpayments' if you will. i.e.. do you have to tell the tax people what your standard mortgage payments are and then anything above that you can pay via salary sacrifice?

Thanks.
I never heard about salary sacrifices, but a standard variable mortgage will allow you to make random over payments.Usually the variable isn't a fixed term, you apply for a term like 20 years and the repayments are calculated from the following factors.
1) The amount you borrow
2) The interest rate
3) The term

So if you borrow 100,000 for 10 years , this means to pay the sum back you will have to pay the bank 10,000 per year.Now we all know the banks don't give you cash for nothing so you have to throw the interest rate on top, so if its 5% you will pay an extra 2000 a year.So in total you will have to repay 12000 a year, i.e. 1000 per month. Now if you pay extra on top of your 1000 per month the mortgage will get paid off quicker so you might finish after 7 years instead of 10 and as a result you save on the interest you would have paid the bank.The one thing you must remember is every month you will have to come up with the 1000 no matter what you put on the month before.
This is just the variable mortgage and as you know interest rates change so the 2000 per year could easily change to 2500 per year.
The fixed rate mortgage is a different kettle of fish, you have the security of knowing the interest rate is fixed but you must keep the 10 year term,which means you pay the bank more interest in the long run, some mortgages allow you different things like a one off bulk payment etc.
This is probably understood by most here, i'm in the process of getting a mortgage and have just recently understood how the whole thing works, so i thought i'd share my enlightenment.
Just curious does everyone who has a mortgage know what i explained above? It's just that there are so many different types and little extras i think the banks are trying to make it complicated to blind people from what is actually happening.
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Old Apr 18th 2007, 10:22 am
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Default Re: Salary sacrificing.

Originally Posted by ed_the_lad View Post
I never heard about salary sacrifices, but a standard variable mortgage will allow you to make random over payments.Usually the variable isn't a fixed term, you apply for a term like 20 years and the repayments are calculated from the following factors.
1) The amount you borrow
2) The interest rate
3) The term

So if you borrow 100,000 for 10 years , this means to pay the sum back you will have to pay the bank 10,000 per year.Now we all know the banks don't give you cash for nothing so you have to throw the interest rate on top, so if its 5% you will pay an extra 2000 a year.So in total you will have to repay 12000 a year, i.e. 1000 per month. Now if you pay extra on top of your 1000 per month the mortgage will get paid off quicker so you might finish after 7 years instead of 10 and as a result you save on the interest you would have paid the bank.The one thing you must remember is every month you will have to come up with the 1000 no matter what you put on the month before.
This is just the variable mortgage and as you know interest rates change so the 2000 per year could easily change to 2500 per year.
The fixed rate mortgage is a different kettle of fish, you have the security of knowing the interest rate is fixed but you must keep the 10 year term,which means you pay the bank more interest in the long run, some mortgages allow you different things like a one off bulk payment etc.
This is probably understood by most here, i'm in the process of getting a mortgage and have just recently understood how the whole thing works, so i thought i'd share my enlightenment.
Just curious does everyone who has a mortgage know what i explained above? It's just that there are so many different types and little extras i think the banks are trying to make it complicated to blind people from what is actually happening.
Salary sacraficing allows you to pay stuff like your mortgage before your wage is taxed, so it reduces the amount you pay in tax, as it is what remains of your pay after the salary sacrafice that is taxed.
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Old Apr 18th 2007, 10:26 am
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Default Re: Salary sacrificing.

Originally Posted by annqldau View Post
Salary sacraficing allows you to pay stuff like your mortgage before your wage is taxed, so it reduces the amount you pay in tax, as it is what remains of your pay after the salary sacrafice that is taxed.
Ah, trust the aussies to come up with a fancy name for mortgage relief.
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Old Apr 18th 2007, 10:28 am
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Default Re: Salary sacrificing.

Originally Posted by ed_the_lad View Post
Ah, trust the aussies to come up with a fancy name for mortgage relief.
I couldn't have got that on the NHS.
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Old Apr 18th 2007, 10:32 am
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Default Re: Salary sacrificing.

Originally Posted by annqldau View Post
I couldn't have got that on the NHS.
G might have though (when you keeled over from overwork )
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Old Apr 18th 2007, 10:37 am
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Default Re: Salary sacrificing.

I think I have just answered my own question on re-reading the replies.

I take it you can overpay your mortgage by anything up to your sacrificing allowance?

So, I dare say you can split your allowance between mortgage, extra super payments, laptop computer?

What is the allowance, is it a percentage of your salary - and is it the same for everyone or assessed on individual circumstances?

Thanks.
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Old Apr 18th 2007, 10:51 am
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Default Re: Salary sacrificing.

Originally Posted by Techno Freak View Post
Hello all.

Can anyone shed some light on this potentially complicated subject?

I had heard that you can salary sacrifice for certain things, like a company car, extra super payments etc. We have just had some fact sheet through from Alan Collet and it mentions on there salary sacrificing for relocation costs.

Has anyone done this, or know how it works?

I have a job lined up to start when we arrive in Melbourne in October and wondered if I can make use of this for our relocation costs?

Thanks.
This calculator will help you working things out. It's not as scary as it looks!

The government co-contribution can be pretty handy for low incomes. Government will put in $1500 for $1000 which you contribute upto $28K

http://www.hesta.com.au/Calculators/...Sacrifice.aspx

Note: The help button will explain each line.

http://www.ato.gov.au/content/downlo...89-12-2005.pdf

PG

Last edited by Pommie Granite; Apr 18th 2007 at 11:03 am.
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Old Apr 18th 2007, 11:42 am
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Default Re: Salary sacrificing.

Originally Posted by Pommie Granite View Post
This calculator will help you working things out. It's not as scary as it looks!

The government co-contribution can be pretty handy for low incomes. Government will put in $1500 for $1000 which you contribute upto $28K

http://www.hesta.com.au/Calculators/...Sacrifice.aspx

Note: The help button will explain each line.

http://www.ato.gov.au/content/downlo...89-12-2005.pdf

PG
Brilliant calculator - thanks.

What I want to know though is how much are you allowed to sacrifice? Is it a simple percentage of you annual income?

Thanks.
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Old Apr 18th 2007, 11:53 am
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Default Re: Salary sacrificing.

Originally Posted by Pommie Granite View Post
This calculator will help you working things out. It's not as scary as it looks!

The government co-contribution can be pretty handy for low incomes. Government will put in $1500 for $1000 which you contribute upto $28K

http://www.hesta.com.au/Calculators/...Sacrifice.aspx

Note: The help button will explain each line.

http://www.ato.gov.au/content/downlo...89-12-2005.pdf

PG
Sorry to take this completely off track, I was looking at the Hesta calculators and it reminded me that many years ago there was a bra on the market called Hestia. Guess what this stood for?

Now, back on track, compare salary sacrificing Australia with salary sacrificing UK at:

http://forums.moneysavingexpert.com/....html?t=174519

OzTennis
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Old Apr 18th 2007, 1:32 pm
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Default Re: Salary sacrificing.

Originally Posted by Techno Freak View Post
Hello all.

Can anyone shed some light on this potentially complicated subject?

I had heard that you can salary sacrifice for certain things, like a company car, extra super payments etc. We have just had some fact sheet through from Alan Collet and it mentions on there salary sacrificing for relocation costs.

Has anyone done this, or know how it works?

I have a job lined up to start when we arrive in Melbourne in October and wondered if I can make use of this for our relocation costs?

Thanks.
Salary sacrifice is where certain things are packaged in your salary, so you pay for them out of pre-tax income, reducing the overall amount that you have to pay in tax. The catch is, to stop people packaging everything and avoiding tax altogether, the government/ATO levy something called Fringe Benefit Tax (FBT) which is a whopping 48% charged against the employer. Salary Sacrificing therefore only becomes attractive for what are called exempt benefits. There is a list of the principle exempt benefits on the ATO site here: http://www.ato.gov.au/businesses/con...tm&page=25&H25 Relocation is section 58b and has a few conditions attached to it. It is worth getting your employer to put the offer in writing as some "forget". 58e exempt benefit is also interesting as it opens the possibility to package your flights and accommodation on the way over.

I am in the process of claiming back storage and shipping for my stuff as the company is prepared to package the costs I have incurred.

Good luck

Mark
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Old Apr 18th 2007, 1:41 pm
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Default Re: Salary sacrificing.

Originally Posted by mbike View Post
Salary sacrifice is where certain things are packaged in your salary, so you pay for them out of pre-tax income, reducing the overall amount that you have to pay in tax. The catch is, to stop people packaging everything and avoiding tax altogether, the government/ATO levy something called Fringe Benefit Tax (FBT) which is a whopping 48% charged against the employer. Salary Sacrificing therefore only becomes attractive for what are called exempt benefits. There is a list of the principle exempt benefits on the ATO site here: http://www.ato.gov.au/businesses/con...tm&page=25&H25 Relocation is section 58b and has a few conditions attached to it. It is worth getting your employer to put the offer in writing as some "forget". 58e exempt benefit is also interesting as it opens the possibility to package your flights and accommodation on the way over.

I am in the process of claiming back storage and shipping for my stuff as the company is prepared to package the costs I have incurred.

Good luck

Mark
So is there any difference between salary sacrificing something and being able to claim it as a deductible expense in your annual tax return? eg if your storage and shipping can be claimed as work related, does it make any difference (apart from timing) whether the tax is not deducted at the time of your monthly salary being calculated compared to a bigger tax return? Perhaps what can be salary sacrificed and what is a deductible expense are not the same thing?

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Old Apr 18th 2007, 8:46 pm
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Default Re: Salary sacrificing.

Originally Posted by Wendy View Post
G might have though (when you keeled over from overwork )
LOL...I'd have got invalidity benefit on NHS, he was worth more than me if he keeled over that's why I keep pushing him.
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