The easiest way to increase your income without working longer hours is to Salary Package!
Put simply, Salary Packaging is a way for employees to purchase a variety of goods, services and bill paying (including mortgages or rent), using tax-free dollars. The end result is an increase in take-home pay. Salary Packaging is very easy to setup and adds enormous value for both employees and employers. It’s that simple!
Salary Packaging is a fringe benefit that is accessible to employees who work for an organisation who qualifies for fringe benefit tax (FBT) exemption. Salary Packaging guidelines are approved by the Australian Taxation Office (ATO). Employers who are Public Benevolent Institutions (PBIs) are approved by the ATO to offer Salary Packaging as a staff attraction and retention strategy to help maintain a consistent and motivated workforce.
15 May 2015
Cap for salary packaged meal entertainment and holiday accommodation/venue hire expenses
Click here to read our update regarding the potential impact of the proposed Federal Budget tax reforms announced on Tuesday 12 May 2015, relating to benefits allowable by the Australian Tax Office (ATO) for meal entertainment and holiday accommodation/venue hire.
Further updates on this issue will be posted to this page, so check back regularly.
1 April 2015
Important: FBT Rate Changes
FBT rates will move from 47% to 49%, accompanied with an increase in the annual FBT capped amounts.
As a result of the temporary budget repair levy of 2% being introduced by the Federal Government, there has been a change to the top marginal tax rate for individuals which took effect on 1 July 2014. This has had a direct effect on the FBT rate, thus moving it from 47% to 49% effective for a two year period (1 April 2015 to 31 March 2017).
However, with the Federal Government announcing that it will be increasing the capping limits along with the FBT rate, this has meant that in effect, there will be no change to the benefits of those employees salary packaging.
Tables showing the new grossed up rates, new capped limits along with further details can be found here: FBT Rate Changes for PBI PHU effective 1st April 2015 (145kb PDF)
Increase to the Medicare levy
Recent Federal Government announcements have seen an increase to the Medicare Levy from 1.5% to 2%, effective 1 July 2014. As a result there will also be a shift in the Fringe Benefit Tax (FBT) rate from 46.5% to 47%. Employers that currently pay FBT on employee benefits will also see an increase in the amount of FBT that needs to be paid from 1 April 2014. Changes to the FBT rate also mean that there will be a change in the rates used to “Gross Up”, for the calculation of the FBT Liabilities and Reportable Fringe Benefits Amounts (RFBA).
These changes will be implemented in the 2014-15 FBT year commencing 1 April 2014. To read our information sheet on the changes and the impacts on your organisation, click here.