Browse Forums Home Finance Re: salary sacrifice 2Apr 12, 2011 10:38 pm I'm pretty sure its only worthwhile when you don't have to pay fbt, such as working for a hospital etc. I salary package and $400 odd comes out pretax and goes right onto the mortgage. But I'm sleep deprived, I could be wrong my new build thread- Ben Trager https://forum.homeone.com.au/viewtopic.php?f=31&t=89826 my switch build thread (2011) https://forum.homeone.com.au/viewtopic.php?f=31&t=36569 Re: salary sacrifice 3Apr 12, 2011 11:00 pm As to whether anyone can do it - I think it always depends on whether your employer permits it. Different industries allow their employees to salary sacrifice different things too, like what tinkster refers to above. I am not allowed to salary sacrifice mortgage payments; if I did I would live in a castle! I salary sacrifice a lease car, which is to say that the finance and running costs come out of my pay before tax is deducted. Carefully managed it is still worthwhile even though I pay an FBT component after tax. I also salary sacrifice a small amount extra into my super every pay. Simply (and I hope I don't stuff this up ): say you earn a thousand dollars, pay $300 tax on it and then pay an extra $100 into your super (which is separate to the 9% that your boss pays on your behalf) from the remaining $700. You have $600 left over in your pocket, ok? Now, instead of paying the extra $100 into your super after tax, if you salary sacrificed that amount instead, it means the $100 goes into your super from the $1000 you started with. What happens now is that your salary is now only $900 because the super has come out before tax, and from that $900 you might only pay $270 tax. So, now you have $630 left in your pocket after tax has been deducted and the extra super payment has gone in, instead of $600 in the earlier scenario! Winner! Its effectiveness is largely dependant on your marginal tax rate - the higher your starting income, the more tax dollars you will save by sacrificing some of that income. Geoff - Decophile. Re: salary sacrifice 4Apr 13, 2011 12:14 am I don't live in a castle, I'm only allowed to sacrifice around $9500 per year to my mortgage. my new build thread- Ben Trager https://forum.homeone.com.au/viewtopic.php?f=31&t=89826 my switch build thread (2011) https://forum.homeone.com.au/viewtopic.php?f=31&t=36569 Re: salary sacrifice 5Apr 13, 2011 7:46 am Eager explained it well. You need to look at the options carefully and decide whether it's worth it for you. It's not worthwhile for us to salary sacrifice a car, because we don't do enough kms in a year to get any benefit (you really need to travel at least 25,000; we do about 20,000). In the past, we've salary sacrificed laptops (but the govt put a stop to that ), and it's definitely worth salary sacrificing superannuation. Some offer child care fees, car parking, all sorts of things - but those usually attract FBT, so you need to consider that. There's no FBT on super. Ask your payroll department what's available and see if they have an explanatory booklet or other publication. Re: salary sacrifice 6Apr 13, 2011 8:35 am I think everyone can salary sacrifice to super and usually tax advantages to doing so (unless you are on low income and are better off doing after tax contributions and claiming govt co-contribtuions - is that scheme still running?) But when I worked in Aged Care we could put $609 (this was the maximum amount we could do and not pay FBT) per fortnight on to anything, some people paid it directly to mortgages, rent, school fees etc - others put all onto a Visa debit card and could then use that card to pay anything that you could buy with Visa card - in other words was as good as cash. Or combination of say, rent and card - you could divide it up however you wished. Was brilliant - effectively got $609 tax fee - or increased ones tax free threshold by that amount - around $5000 more in my pocket each year. But to do this you have to work for an eligible employer - there are different levels of eligibility and we were the top level. Employer has to be a PBI - non profit public benificiary institution - Hospitals (like Tinkster said) Aged care, Charities etc. Re: salary sacrifice 7Apr 13, 2011 2:15 pm tinkster I don't live in a castle, I'm only allowed to sacrifice around $9500 per year to my mortgage. Hey that's ok, I hope you didn't think I was suggesting that you did. If I worked for a company that allowed salary sacrifice into a mortgage, I would have budgeted for a slightly more expensive house, that's all. Geoff - Decophile. Re: salary sacrifice 8Apr 13, 2011 6:09 pm Tis ok eager, I knew what you meant my new build thread- Ben Trager https://forum.homeone.com.au/viewtopic.php?f=31&t=89826 my switch build thread (2011) https://forum.homeone.com.au/viewtopic.php?f=31&t=36569 Re: salary sacrifice 9Apr 13, 2011 9:23 pm If you work for a non profit organization you are able to salary sacrifice a lot more than other people generally everything other than super will inure an FBT tax this in most cases will outweigh almost any advantage .This was introduced to stop high income business's and business persons from paying all there bills ie house ,car ,school fees and then claiming a low income. Companies that allow sal sacrifice into other things generally will pick-up the FBT for the employer but i dont think it happens much these days. Re: salary sacrifice 10Apr 13, 2011 9:30 pm thanks for all of your replies..... I will speak to my boss. He is a one man band - a specialist... so not sure how salary sacrifice works in that regard. Will keep it in mind once we get a mortgage! Re: salary sacrifice 11Apr 19, 2011 2:15 am salary sacrifice = A portion of your pays goes straight into your mortgage repayment before it get's taxed. Hence reducing your taxable income and sacrificing that "amount out" Not all company allows for salary sacrifice- its only available for certain- company, industry and sector.- speak to HR. Note- salary sacrifice can work for ANYTHING not just a mortgage... it's very common for company cars and kids school fees Regards Michael Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au Re: salary sacrifice 12Apr 19, 2011 9:42 pm shape salary sacrifice = A portion of your pays goes straight into your mortgage repayment before it get's taxed. Hence reducing your taxable income and sacrificing that "amount out" Not all company allows for salary sacrifice- its only available for certain- company, industry and sector.- speak to HR. Note- salary sacrifice can work for ANYTHING not just a mortgage... it's very common for company cars and kids school fees Regards Michael It is only tax effective if you work for a public benevolent institution. It does not work for every employer as the FBT you pay exceeds the tax benefit you obtain (unless you are already on the top tax rate) for a normal employer. It is available to nurses etc at public hospitals and people working for charities and some church related entities. Different sectors have different caps on the maximum you can sacrifice FBT free. Slab Down: 2/6/11 Moved in 13/3/2012 Current Status : Waiting for the garden to grow. My build thread : viewtopic.php?f=31&t=47031 |