Salary sacrifice

Benefits of salary packaging at a not-for-profit

When you work for a not-for-profit organisation such as BlueCare, you can have more money in your pocket due to the magic of salary packaging, also known as salary sacrificing. This essentially allows you to use your pre-tax (gross) income to pay for your expenses, which means you pay less tax and enjoy more of your pay.

In fact, you can salary package up to the following each Fringe Benefits Tax year (April 1-March 30):

• $15,900 to pay for expenses such as rent or mortgage, household utilities and insurances.
• $2,650 to pay for entertainment such as eating out, transport and accommodation.
• Unlimited to pay for car parking (for business use).
• New car – you can even salary package a car, through a novated lease.
• Remote area benefits – package up to 50% of costs of rent, mortgage interest, residential utilities, holiday transport and property purchase, on top of the $15,900. This is available for those living and working in areas classified as ‘Remote’ by the Australian Taxation Office.

What is salary sacrificing?

By paying for things before income tax is calculated, you pay less tax. This is because your salary packaging money is deducted first and then your tax is calculated on the remaining amount.

For example, if your gross salary is $55,000 a year, after tax you would normally be left with about $45,000. However, if you pay for your expenses before tax is calculated (up to the maximum amount), you can save almost $5,500 a year in tax. It’s like giving yourself a pay rise.

How much can I salary sacrifice?

The most you can salary package is either $611.54 a fortnight or $305.77 a week, up to $15,900 a year.

How does salary sacrifice work?

At BlueCare, each pay cycle, your nominated amount is deducted from your salary before tax. It goes to our salary package partner, AccessPay, who provides it back to you to pay for the items you have selected, such as your mortgage, rent or daily expenses. It’s still your money and you can still spend it on the things you need, but it’s taken out of your pay before your tax is calculated. The remainder of your salary is then taxed and paid to you as normal, leaving you with more to spend each pay cycle. AccessPay normally reimburse your nominated deduction amount the day following the pay cycle.

Another option is AccessPay’s Salary Packaging and Meal Entertainment Card, where your nominated salary packaging funds are transferred to the card, and you can use it to pay the bill, entertainment expenses etc.

Note: Some salary packaging benefits are considered to be Reportable Fringe Benefits and may impact existing government or personal finance arrangements such as HELP/HECS debt, child support and Medicare levy surcharge. Check with your salary packaging provider for guidance on setting up a salary packaging arrangement that works best for you.

Salary packaging is available as BlueCare is part of UnitingCare Queensland, which is a not-for-profit organisation (endorsed public benevolent institution and not-for-profit hospital), and receives a fringe benefits tax (FBT) exemption.