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How does Salary Packaging work? Salary Packaging is an ATO-approved method of restructuring your gross salary to ensure you pay less tax and have more take-home pay. For employees in the Charity, Public Health and PBI space, Salary SALARY PACKAGING PACKAGING SALARY Packaging goes some way to level the remuneration playing field with other sectors.. SALARY PACKAGING How Salary does Packaging work? Without salary packaging, an employee is paid their wage after tax is taken out by their employer. This is the basis of Australia’s ‘Pay As Packagable expenses You Go’ tax system. What an employee takes home is used to pay for • Mortgage repayments living expenses, among other things. With consent of their employer, • Rent payments salary packaging allows employees to pay for many of these same living • Personal loan repayments expenses, but before tax is removed. • Credit Card repayments • Laptops and smartphones How it works • New and used cars Employers that have an FBT exemption from Government, may pass the • Living costs in remote areas exemption onto employees in the form of salary packaging. They may • Meal Entertainment administer the program inhouse or outsource the service to a provider • Venue Hire like Eziway, as your employer does. Indicative savings If you maximise your salary ► ► ► packaging arrangement to the cap, the following savings are typical annually and fortnightly: Employee tells Eziway Eziway creates Each pay Eziway When the employer what expenses they an employee seeks from their funds have cleared Public Hospitals want to package and account and sets employer exactly Eziway reimburses Salary Annual Fortnight what account they up electronic how much it needs the employee want reimbursements disbursements as in pre-tax dollars for substantiated 30,000 2,125 82 made to each per the employee’s to reimburse the expenses paid 40,000 2,139 82 pay cycle instructions employee 50,000 2,977 115 How much can you package? 60,000 2,977 115 The ATO caps the amount of money an employee can package in 70,000 2,977 115 standard benefits depending in which sector they operate. Annually, these caps are: Charities & PBIs Public Hospitals: $9,010 net ($17,000 grossed-up) Salary Annual Fortnight Charities & PBIs: $15,900 net ($30,000 grossed-up) 30,000 2,808 108 In addition, employees from both sectors can package a further $2,650 40,000 4,004 154 (net) per year above the cap ($5,000 grossed-up) to pay the cost of meals, 50,000 5,148 198 entertainment, accommodation or venue hire. 60,000 5,512 212 Substantiation 70,000 5,512 212 Substantiation is evidence of an expense. The ATO requires proof of spend for all salary packaging benefits and stipulates what documentation is acceptable for each benefit type. 03. 8768 5777 | 1800 932 394 | [email protected] | eziway.net.au.

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