Salary sacrifice the purchase of laptop computers and PDA’s. SAVE $000s39% of employees believe the opportunity to acquire a laptop by salary sacrifice is the most important and preferred packaging benefit. Why? They save 30% to 50% (according to their marginal tax rate) plus 10% GST. Help them save $000s. Save your company capital expenditure. See their productivity rise. Win – Win!
What is Salary sacrifice?Salary sacrifice is a service that many employers offer their staff. It allows you to receive part of your salary as “pre-tax” for the purchase of Government sanctioned products. This option is one of the few ways to avoid FBT (Fringe Benefits Tax) when it comes to salary packaging.
So how does it work?Salary sacrifice allows you to use your salary before it is taxed at your marginal rate. Rates can be as high as 46.5% in some cases (including Medicare Levy), so in this case an approved and sanctioned salary sacrifice purchase can represent 46.5% saving (as 46.5% of the amount you’re spending would have been tax anyway. In the case where you opt to use salary sacrifice to purchase a Government sanctioned product, the funds are drawn from your pre-tax salary, meaning you do not have to pay your marginal rate on that amount, while also reducing your taxable salary, and hence the total amount of tax you pay.
How do I find out more?Ask your payroll about the salary sacrifice options that are available. If they do not have options available – ask them why? Salary Sacrifice can save you 000’s in some cases, is approved by the Government and the ATO, and should be available to every Australian worker.
- 45% of all BP staff took advantage of the FBT exemption on laptops during a 4 year period.
- 14,000 Westpac employees saved about $15 million over a 7 year period.
The government’s policy changes in 2008…
- endorsed salary sacrifice arrangements
- expanded the range of eligible products
- removed the rorts by defining the work-purpose test more clearly
Pinpoint’s salary packaging arrangements are 100% compliant with ATO and government policy. If the government had wanted to stop salary sacrificing for laptops, it would have stopped it.In a tight labour market, you need a competitive edge to attract and retain great employees. Read more in our whitepaper: Salary Sacrifice – still the No. 1 staff benefit