With many households feeling the squeeze of financial pressure, employers may find that their staff are enquiring about their salary packaging options. Salary packaging is still a tax effective option for both employees and their employers, however caution must be had as to the types of benefits that are packaged. The packaging of Fringe Benefits Tax (“FBT“) exempt benefits, such as laptops, mobile phones, briefcases and other portable tools of trade will still provide a benefit to both parties.
Salary packaging superannuation is not considered a fringe benefit and will not attract any FBT, however care should be taken in relation to the employee’s contribution limits.
Salary packaged cars continue to remain popular, with employees on income of $87,000 or more receiving the most benefit. When structuring the employee’s salary package, employee contributions are still popular as they usually provide the greatest cash benefit to the employee. It is important that employee contributions to reduce any FBT are reviewed by employers, as often the salary packaging provider may not appreciate the FBT risks involved where contributions are not paid on time, or where there is a deficit or excess in contributions made by the employee compared with the FBT liability.
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