Is my Salary Package structured tax-effectivelly?
Employers who value their staff as individuals often let their employees choose how they are remunerated for the work they do by offering flexible salary packaging arrangements.
Salary Packaging involves structuring your salary as a combination of cash income and other approved fringe benefits that are paid out of your gross (before tax) salary.
For employees, the benefits are in being able to customise their Salary Package by choosing benefits that best suit their individual needs. This could include ‘packaging’ your car, mortgage, meals and entertainment, as well as a range of employment related expenses.
For employers, the benefits of providing flexible salary packaging are in attracting and retaining high quality employees as well as the direct benefit of lowering employment related ‘on costs’ (such as payroll taxes).
There are numerous taxation aspects for employees to consider, principally related to whether specific benefits attract Fringe Benefits Tax (FBT) and what level of FBT is applicable to the specific benefit provided.
Banksia Partners can advise executives and valued staff how best to structure their remuneration so as to maximise after tax benefits, harness their earning power to increase and protect wealth, while minimising the overall levels of income taxes they pay.