Eligible employees are entitled to enjoy an amount of their salary tax-free to be spent on certain items. The amount that can be accessed tax-free depends on your industry and is known as your benefits ‘cap’. The ‘cap’ amounts is determined by the ATO and varies depending on the industry you work in.
‘Capped’ benefits
Living expenses
Mortgage repayments
Rent
Meal entertainment
Accommodation and venue hire
Living Expenses / Mortgage Repayments / Rent.
Employees of eligible charities can salary package up to $15,900 per annum, and eligible employees of public hospitals up to $9,010 per annum, without incurring Fringe Benefits Tax (FBT).
Those who work for ‘Rebateable’ employers such as independent schools are not exempt from FBT but are entitled to a 47% rebate on FBT, capped at $15,900 of salary packaged benefits each year.
A deduction for your living expenses, mortgage repayment or rent is made from your pre-tax salary, reducing your taxable income and therefore tax payable. The deducted amount is then reimbursed or paid as below.
Living expenses.
- Reimbursement into your bank account; or
- Paywise card ($66 pa fee)
Mortgage repayments.
- For the property you live in
- Paid directly into the loan or into your bank account
Rent.
- Paid into your bank account within 24 hrs of your pay
Meal Entertainment / Accommodation & Venue Hire.
In addition to the above capped items, some employees are also entitled to salary package up to $2,650 per annum for “meal entertainment” expenses and even accommodation and venue hire for when you’re on holidays or planning an event.
Meal Entertainment.
- Substantial meal for 2+ people
- Dine in meal
- Drinks + Meal (not ‘drinks only’)
- Payments are easy via the Paywise card
Accommodation and Venue Hire.
- Hotels, Motels, Apartments, B&Bs (including airbnb), cruise ship cabins, caravan park cabin or on-site van, and more!
- Hire of receptions centre or function room.
Capped benefits example.
Susan earns $2,000.00 gross wages per fortnight and pays $324.00 in tax per pay. However, Susan now salary packages with Paywise and is sacrificing $346.53 in pre-tax for her rent expenses.
As her gross taxable income is reduced to $1,653.46 her tax has reduced to $212.00, saving her $2,837.20 per year!
That’s a saving of 8.20% per year!
Get in touch!
To start salary packaging, complete our online application, call us on 1300 132 532 or speak to your employee benefits consultant.
