Salary Packaging

Pack Facts

  • HELP Repayment and Salary Packaging - $9,010

    If you have a HELP debt and you Salary Package then the amount of HELP you have to repay each year will be affected.

    When you Salary Package, the benefit you receive will be reported on your Payment Summary (formerly called your Group Certificate).

    The items you include in your Salary Package will appear in your Reportable Fringe Benefits (RFB). Your RFB is made up of the actual amount of benefit you received, plus the Fringe Benefits Tax that would have been payable on that benefit. For an explanation of RFB including how it is calculated on your payment summary please refer to PACK FACT Reportable Fringe Benefits on your Payment Summary”.

    HELP Repayment Income:

    The Australian Taxation Office (ATO) considers the following as HELP repayment income:

    Your taxable income for an income year; PLUS

    Any amount your taxable income has been reduced by a net rental loss; PLUS

    Your total reportable fringe benefits amounts shown on your Payment Summary.

    You need to advise your Pay Office to calculate your HELP on your total estimated income, including your RFB. To do so, you should complete an ATO form called Withholding Declaration Upwards Variation and supply it to your Employer. This can be obtained from the ATO website.

    Download HELP Repayements and Salary Packaging Pack Fact for more details and working example for the $9010 Threshold limit.

    Download

    HELP Repayment and Salary Packaging - $9,010

  • How Fringe Benefit Tax is Calculated on Motor Vehicles

    Fringe Benefits Tax (FBT) is charged on all Motor Vehicles included in your salary package over the

    FBT year.

    The FBT year runs from 1 April to 31 March and the tax is payable on 31 March.

    To calculate the FBT payable on your Motor Vehicle using the Statutory Method, a formula set by the

    Australian Taxation Office is used:

     

    FBT Payable =  Purchase Price  X  Statutory Rate  X  Gross Up Factor  X  FBT Rate

     

    FBT Year 1st April 2016 to 31st March 2017:

    FBT Rate = 49%

    Purchase Price  =  Cost price of vehicle (excluding stamp duty, registration and fleet discount but including dealer delivery and GST).

    Statutory Rate  Download the Pack Fact PDF for details

    Gross Up Factor =  2.1463 for Leases where GST is payable

                                     1.9608 for Leases where GST is not payable

     

    FBT Year 1st April 2017 onwards:

    FBT Rate = 47%

    Purchase Price  =  Cost price of vehicle (excluding stamp duty, registration and fleet discount but including dealer delivery and GST).

    Statutory Rate  20%

    Gross Up Factor =  2.10802 for Leases where GST is payable

                                     1.8868 for Leases where GST is not payable

    The Pack Fact with effect from 1st April 2017 is avaialble here.    

    Download the Pack Fact How FBT is Calculated on Motor Vehicles for more information, example calculations and explanation of the transitional arrangements and rates (%).  

    Download

    How Fringe Benefit Tax is Calculated on Motor Vehicles

  • Input Tax Credits (ITC's)

    By salary packaging, you can effectively save on GST.

    When you package a benefit that attracts GST, your employer will receive a credit for the GST paid from the Australian Tax Office (ATO).  This credit is referred to as an Input Tax Credit (ITC).  After receiving the ITC, your employer will pass back the ITC to you through your salary package.

    The full amount will be paid for the benefit, however the amount less GST will be charged to your package.

    ITC’s can be passed back for most items where GST is payable such as:

     Most Work Related expenses eg

    •    Briefcases
    •    iPad / Tablet / Laptop / Notebook Computers
    •    Professional Subscriptions

    Motor Vehicle expenses eg

    •    Motor Vehicle Leases
    •    Petrol and Repairs

    Utilities eg

    • Electricity/Gas/Telephone

    And many more eg·       

    • House Insurance 
    • Public Transport
    • Other General Expenses 

    Even your Remunerator fees!

    You can track the ITC’s passed back by your Employer with your Remunerator Employee Statement.

    Download

    Input Tax Credits (ITC's)

  • How to Claim Meal Entertainment

    As of the FBT Year starting 1st April 2017, the maximum amount you can claim is increased to $2650.

    What can be included?

    • Meals only
    • Meals & Drinks combined
    • Take Away Outlet meals where the business has dine-in facilities
    • Meals whilst on holidays (Australia or Overseas)
    • Meals & Drinks supplied by professional caterers eg. weddings, birthdays

    What is excluded?

    • Drinks only
    • Tips
    • Theatre Restaurants
    • Theme Park/Concert entry
    • Marquees, equipment, seating, band costs etc, associated with professionally catered functions

    Download the Pack Fact How To Claim Meals Entertainment for all the details and clarification you require to claim and substantiate this expense.

    Download

    How to Claim Meal Entertainment

  • Medicare Levy Surcharge

    All taxpayers currently pay a 2.0% Medicare Levy which is deducted with your fortnightly tax and applies to your total gross salary.

    For taxpayers who do not have any private health insurance (patient hospital cover) and an Income in excess of specified thresholds, they are subject to a Medicare Levy Surcharge (MLS).

    Please refer to https://www.ato.gov.au/Individuals/Medicare-levy/Medicare-levy-surcharge/  for details on how it may affect you.

    When you Salary Package, the amount the MLS is calculated on is adjusted to take into account the benefits you are receiving.  After Salary Packaging, the amount the MLS is calculated on is the sum of:

    • Your taxable income; plus
    • Your total Reportable Fringe Benefits (see Reportable Fringe Benefits on your Payment Summary Pack Fact).

    If this sum makes you subject to the MLS, you will be advised of any surcharge payable when you receive your notice of assessment from the Australian Taxation Office.

    Download the Medicare Levy Surcharge Pack Fact for a working example.

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    Medicare Levy Surcharge

  • Reportable Fringe Benefits on your Payment Summary

     

    Employers are required to record the value of Fringe Benefits provided to each of their employees. This is referred to as your Reportable Fringe Benefits (RFB) and may appear on your Payment Summary (formerly called your Group Certificate) each year.

    The amount that appears on your Payment Summary will be for the Fringe Benefits Tax (FBT) year ending 31 March.

    Your Reportable Fringe Benefits amount, is calculated by using the following formula:

    FBT Year 2016-2017

     Reportable Fringe Benefits = Amount of Benefit / (1-FBT Rate) 

    The current FBT Rate for this FBT year only, is 49%

     Reportable Fringe Benefits = Amount of Benefit / (1-0.49)

     

    FBT Year 2017 onwards

     Reportable Fringe Benefits = Amount of Benefit / (1-FBT Rate) 

    The current FBT Rate for this FBT year only, is 47%

     Reportable Fringe Benefits = Amount of Benefit / (1-0.47)

     

    The amount recorded in the Reportable Fringe Benefits Tax box is not used to calculate your Income Tax Liability. However, it can be included in a number of income tests relating to government benefits and obligations such as Child Support payments, Medicare Levy, HECS repayments and Superannuation Surcharge.

    PLEASE NOTE: Where an individual’s fringe benefits amount is $2,000 or less there is no requirement for the employer to report the amount on the employee’s payment summary.

    The Pack Fact pdf detailing fbt rate with effect from 1st April 2017 for financial year 2017 -2018  is available here.

    Download

    Reportable Fringe Benefits on your Payment Summary

  • How do Reimbursements Work ?

     Reimbursements

    Download How Do Reimbursements Work? Pack Fact for a full explanation.

    Download

    How do Reimbursements Work ?

  • Motor Vehicle Unavailability and FBT

     If you do not have use of your vehicle for a period of time, you may be able to declare unavailability. The employee’s FBT liability will be then reduced by any days deemed as being unavailable.

    This will only be the case if:

    • The vehicle must be garaged on company owned or leased premises;  AND
    • The employer removes the control of the vehicle from the employee (eg. holds the keys) and ensures the vehicle is not available for private use by the employee or a family member of the employee.

    OR

    • The vehicle is being repaired and you do not have access for at least a 24 hour period.

    Unavailability cannot be claimed if the motor vehicle is in safe storage or in long-term car parking (eg: airport) while the driver is on an interstate or overseas business trip or on holiday.

    Unavailability can only be recorded as whole days.

    NOTE -  You can log Unavailability by logging into Your Package and submitting the details online.

    Download the MV Unavailability Declaration, for more details, a working example and a form. 

    Download

    Motor Vehicle Unavailability and FBT

  • iPad / Tablet / Laptop

    FBT law allows you to salary package one Laptop Computer and/or iPad / Tablet per FBT year (1 April to 31 March). The primary purpose test applies, which means it must be used primarily for work related use.

    There are no restrictions placed on the type or cost of the iPad / Tablet or Laptop to be packaged. From 1 April 2005, printers for use with Laptop computers can be packaged. No other peripherals, [such as scanners, external hard drives] can be packaged.

    Your options to salary package an iPad / Tablet / Laptop are:

    1. Purchase the iPad / Tablet / Laptop outright yourself (cash or credit card) and submit a reimbursement claim; and
    2. Purchase the iPad / Tablet / Laptop on a 12 months interest free purchase plan and submit a reimbursement claim.

    Download the Pack Fact iPad Tablet Laptop Computers for more details.

    Download

    iPad / Tablet / Laptop

  • Family Assistance / Family Tax Rebate / Child Care Rebate

    When you Salary Package, the benefit you receive will be reported on your Payment Summary (formerly called your Group Certificate).

    The items you include in your Salary Package will appear in your Reportable Fringe Benefits (RFB). Your RFB is made up of the actual amount of benefit you received, plus the Fringe Benefits Tax that would have been payable on that benefit. For an explanation of RFB including how it is calculated on your payment summary please refer to PACK FACT Reportable Fringe Benefits on your Payment Summary”.

    Adjusted Taxable Income:

    The Australian Taxation Office (ATO) considers the following in calculating your adjusted taxable income:

    • Your taxable income for an income year; PLUS
    •  Any amount your taxable income has been reduced by a net rental loss; PLUS
    • Your total reportable fringe benefits amounts shown on your Payment Summary.

    The ATO will use your adjusted taxable income when calculating your entitlement to Family Assistance, Family Tax Rebate and Childcare Rebate.

    Download the Family Assistance Pack Fact for details and a working example.

    Download

    Family Assistance / Family Tax Rebate / Child Care Rebate

  • HELP Repayment and Salary Packaging - $15,900

    If you have a HELP debt and you Salary Package then the amount of HELP you have to repay each year will be affected.

    When you Salary Package, the benefit you receive will be reported on your Payment Summary (formerly called your Group Certificate).

    The items you include in your Salary Package will appear in your Reportable Fringe Benefits (RFB). Your RFB is made up of the actual amount of benefit you received, plus the Fringe Benefits Tax that would have been payable on that benefit. For an explanation of RFB including how it is calculated on your payment summary please refer to PACK FACT Reportable Fringe Benefits on your Payment Summary”.

    HELP Repayment Income:

    The Australian Taxation Office (ATO) considers the following as HECS repayment income:

    • Your taxable income for an income year; PLUS
    • Any amount your taxable income has been reduced by a net rental loss; PLUS
    • Your total reportable fringe benefits amounts shown on your Payment Summary.

    You need to advise your Pay Office to calculate your HELP on your total estimated income, including your RFB. To do so, you should complete an ATO form called Withholding Declaration Upwards Variation and supply it to your Employer. This can be obtained from the ATO website.

    Download the Pack Fact HELP Repayements and Salary Packaging for more details and working example for the $15,900 Threshold limit.

    Download

    HELP Repayment and Salary Packaging - $15,900

  • Missed Payroll Deductions / A Gap In Your Salary Package

    In certain circumstances your salary package may have 27 deductions taken in the *Fringe Benefit
    Tax* (FBT) year.
    In this instance in order to continue to have the same deduction and payment amount we force a
    “GAP” in your package. To facilitate this we liaise with your payroll to -

    1. Stop the deduction that is usually taken in the last pay period in the FBT year.
    2. Recommence taking deductions in the new FBT year.

    What does this mean for my tax savings?

    Don’t worry; you will still receive the maximum threshold you are entitled to or the amount you have
    instructed us to salary sacrifice for you. The calculated tax savings are exactly the same regardless
    of the number of pay periods you salary package.

    Missed Deduction

    There are many reasons why a deduction might not be taken from your pay eg,

    • Leave without pay
    • Payroll not having enough time to process the deduction request for that pay period
    • Your fortnightly pay may not have been enough to cover the deduction
    • Time sheets not given to your payroll in time

    What should I do if I think have missed a deduction?

    First, check your payslip, if there has not been the expected amount allocated to your salary
    sacrifice then you have most likely missed a deduction.
    There are a few options now available to you -

    1. A double deduction from next pay. This way you will still have the maximum entitlement and the full amount that you budgeted for. To take up this option please email us at service@remunerator.com.au with your name, package number, and the instruction to take a double deduction next pay. We will then liaise with your payroll to make this happen.
    2. Do nothing – if you do not want or can’t afford a double deduction in the next pay and don’t mind the missed payment then we will just leave the package as is and wait for the next deduction taken to re-commence payments. This option means that you will not receive your full entitlement.
    3. Repackage -  This way we can re-calculate your package to a more suitable budget.

    What if I miss more than one deduction or take leave such as maternity or leave without pay?

    In this case you will need to Repackage. If you are expecting to miss several deductions or are
    going on an extended leave-without-pay arrangement we need to be advised in advance so that
    we can suspend your package accordingly. When you return to work please email us at
    service@remunerator.com.au and we will have the package re-started for you.

    Please note that there is a fee charged for repackaging.


    *Fringe Benefit Tax (FBT) year is from 1st April to 31st March yearly

  • Post Tax Employee Contributions (EC)

    What is a Post Tax Employee Contribution (EC)?

    In a motor vehicle salary package, employees are able to pay for vehicle running costs from their take home pay. This can reduce the amount of Fringe Benefits Tax (FBT) payable.

    Remunerator offers the Employee Contribution (EC) method as an option for packaging a Novated Motor Vehicle using the Statutory Method of calculating FBT.

    The EC is set to equal the budgeted FBT value, so that no FBT is payable, provided the vehicle travels  the budgeted kilometres for the period.

    The EC does include GST, which is paid to the employer and funded by the employee’s Salary Deductions.

    How does it work?

    The Employee Contribution is a post tax deduction from the employee’s salary and is used to fund the employee’s running costs (eg. fuel, registration and insurance) and therefore reduces the pre-tax cost of packaging the vehicle.

    Download the Employee Contribution Pack Fact for more details and working examples.

    Download

    Post Tax Employee Contributions (EC)

  • Income Related Expenses

    You can achieve significant savings from Salary Packaging Income Related Expenses.

    Income Related Expenses are generally incurred while performing your job.  For example, you may be able to claim your Telephone Rental if you can prove you are ‘on call’ or are required to contact clients when you are away from the workplace.

    An Income Related Expense would not be the cost of normal travel to and from work, or buying lunch as these are private expenses.

    Income Related Expenses may include:

    • Self Education or Professional Expenses
    • Financial Consulting
    • Investment Loan Interest
    • Home Office Expenses
    • Work Related Travel Expenses
    • Professional Subscriptions and Memberships
    • Income Protection Insurance
    • Professional Indemnity Insurance

    (Please refer to your Employers Salary Packaging Agreement for a full list of expenses you are entitled to package).

    Claiming a Work Related Expense:

     To claim a Work Related Expense, there are some things you need to consider:

    a.             You must have incurred the expense in course of earning your assessable income (salary)

    b.            You must substantiate your claims with receipts or proof of purchase

    Download Income Related Expenses Pack Fact for further details and working example.

    Download

    Income Related Expenses

  • Luxury Car Charge

    The Luxury Car Charge is a benefit paid directly to the Employer through a salary package.  It compensates the Employer for the amount of depreciation above the Car Depreciation Limit (often referred to as the ‘Luxury Limit’) which is not tax deductible.

    The Luxury Car Charge only applies to tax paying organisations.

    Car Depreciation Limit

    The Car Depreciation Limit is indexed each year for inflation.  The limit set by the ATO for the 2015/16 financial year is $57,581.

    The capital cost of the vehicle determines if a Luxury Car Charge is applicable and is calculated from the purchase price of the vehicle, including the Luxury Car Tax and stamp duty,  less registration. A Luxury Car Charge is applicable for Novated Leases and Associate Leases only.

    Download the Luxury Car Charge Pack Fact for a working example

    Download

    Luxury Car Charge

  • Novated Leases - Reimbursement of Lease Payments

    The Tax Office has stated that payment by an employee of an initial lease payment or any subsequent lease payment can not be reimbursed as part of a salary package without being subject to FBT.  The reason given for this is that such payments do not adequately meet the definitions required under the Fringe Benefits Tax Act.

    Whilst the ATO opinion has been challenged, to protect our clients and customers from potential FBT liability, Remunerator will not reimburse lease payments made directly by the employees, unless instructed to do so in writing by the employer.

    DISCLAIMER

    The information supplied on this page is provided as an information guide only.  It contains Remunerator (Aust) Pty Ltd ACN 074 423 966 interpretation of the current Tax Legislation which is subject to change at any time without notice and should not be relied on as a substitute for legal or other professional advice.

                                                                                                                                         

  • Using a Logbook for Your Car to Determine FBT

    Please download the Pack Fact , to obtain clarification on what is required to be completed when using a Logbook to calculate FBT for your motor vehicle. 

     

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    Using a Logbook for Your Car to Determine FBT

  • How to Read Your Statement

    You can access your Statement by logging into the Your Package portal with your package number and password.

    A full explanation on how to read your Statement including fuel card transaction breakdown, is provided in the Package Statement and Fuel Card Report Breakdown Pack Fact document.

    If you have multiple motor vehicles, transactions for all vehicles in your package will be contained in the one Statement.

    Please download the Salary Package Statement and Fuel Card Report Breakdown Pack Fact .

    Download

    How to Read Your Statement