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Why ‘Salary Packaging’ is advantageous?
30 November 2013
is the gist of ‘advantage salary packaging’?
‘Salary Packaging’, which is also
termed as ‘Salary Sacrifice’ is indeed highly advantageous, and is one of the
best available financial options that are presently available for monthly
salaried employees, for taking the fullest possible advantages of their monthly
salary. Accordingly, by means of this method, all monthly salaried employees
can secure funds for procuring valuable items such as brand new vehicles, pricey laptops or notebooks, iPads,
tablets, GPRS units, Income Protection Insurance, education, fuel and parking. This financial scheme is officially
approved by the ‘Australian Taxation Office’, and in accordance with the set
provisions of this pecuniary contract, employees are permitted to enjoy the
liberty of ‘tax-free’ expenditure. According to the general code of taxation,
the due tax has to be deducted from the actual monthly salary of employees.
However, under the scheme of ‘salary packaging’, the amount that is essentially
due to the lessor, as the monthly installment, is taken straightway from the
pre-tax salary of the concerned employee; this will be indirectly a real ‘tax
benefit’ for all employees, as it goes from the ‘pre-tax’ salary. The employer
will not have to spend outside the monthly salary of the employees, but at the
same time, can help the employees in a highly beneficial manner, which will
make the concerned employees more loyal towards the company. This enhanced
fidelity level, in fact, will facilitate the diverse types of ‘employee
retention’ tasks of the company, to a great extent.
are the main prerequisites or laid conditions of ‘salary packaging’ ‘?
scheme is a specific type of financial arrangement between an employee and the
management of the business establishment, where he or she works. In general,
the main prerequisites of this agreement can be summed up as:
The agreement must have been mutually agreed (by
the employer and the employee), before the actual commencement of the job.
The pact can be either in writing, or by word of
mouth; in any case, written agreement will be the best form, because, it will
serve the purpose of documental evidence.
The employee must fully understand that he or she
will not have any right on the ‘given up’ portion of the salary, till the
expiry of the contract.
If the employee gets any extra perk or allowance
that is not accounted for the specific ‘salary sacrifice’, then of course, that
particular amount will be taxable, in accordance with the prevailing taxation
What should the employees do before finalizing an ‘advantage salary packaging’
The main thing that the
employees who are planning to go for the ‘salary package’ scheme will have to
take care is that, they will have to find out a professional finance company
for the same. Finding a reliable financial company for this distinctive
financial scheme is not that much a difficult task these days, because, there
is a plethora of such firms out there in the financial market. In recent times it
is also possible to get online quotes, and therefore, the concerned employees
must always compare and assess the benefits offered by different companies,
before grabbing an ‘advantage salary packaging’