Salary packaging is common in high paying jobs and refers to an arrangement between an employer and employee where the employer provides certain benefits in lieu of cash. Many salary sacrifice into their super account or choose to receive other non-cash benefits, however, some of these options can be subject to Fringe Benefits Tax (FBT). 

Are you eligible for concessional treatment?

Employers will generally pass on any FBT to the employee by way of a reduced salary package. However, fringe benefits provided by certain employers receive concessional treatment subject to a cap. The following organisations are exempt from paying FBT where the grossed-up taxable value of fringe benefits provided to each employee is less than or equal to the capping threshold:

• Public institutions
• Charitable organisations
• Public and non-profit hospitals

Salary packaging non-cash items

Many wonder whether their concessional super contribution cap will be impacted if they begin salary packaging into a non-cash benefit, like a car. However, salary packaging into non-cash benefits does not reduce an individual’s concessional super contribution cap. Meaning that if you are currently salary packaging, you may benefit from salary sacrificing into your super account too.

Timing is important

Arrangements must be made before a remuneration is earned. If it is intended that part of a future bonus is to be salary packaged, it is important that the arrangement be entered into before it is accrued. 

If you receive fringe benefits and want advice on getting the most out of your arrangement, book a discovery session with Venture Wealth Management today.

Source: Financially Speaking Autumn Edition 2022