What is salary packaging?
Salary packaging is an arrangement between Simplygreen, an employer and an employee that enables employees to sacrifice part of their pre-tax salary in return for certain benefits, allowing employees to reduce their taxable income. These benefits can either be exempt or subject to Fringe Benefit Tax (FBT).
Under this arrangement, the employee contractually agrees to forgo part of their salary, in return for the employer providing non-cash benefits. Benefits received in lieu of cash salary are not assessable under an employee’s taxable income.
For example, if you were to package a salary of $120,000, so you receive:
- $20,000 as a car benefit
- $100,000 as income
This reduces your taxable income to $100,000 and you may receive a benefit by paying less income tax as a result.
Some benefits are subject to Fringe Benefit Tax (FBT), while other are exempt from FBT or treated concessionally for FBT purposes.
Why offer novated leasing and salary packaging?
The option to salary package or take out a novated lease through an employer is increasingly becoming an expected part of an employee’s remuneration package. A novated lease allows your employees to pay for their vehicle and associated running cost expenses (petrol, maintenance, tyres, insurance, registration ect.), as deductions from their pre-tax income while avoiding GST on these items.
At Simplygreen, our novated leasing services ease the burden employees face when purchasing and running their vehicle. We assist with arranging finance, sourcing a vehicle, organising insurance and more. Once an employee is an official member with us they have access to the Motorpass expense card, quick reimbursements and a dedicated team of experts who can assist with their novated lease queries.
Beyond tax savings, employees also benefit from having personal and financial planning instilled in their lifestyle through their novated lease budgets, as well as the ability to package extra super contributions.
Salary Packaging has become a necessity in order to attract and retain the best talent in this competitive employment market.
Studies have drawn links between effective salary packaging programs and
- Shorter recruitment cycles
- Lower recruitment costs
- Decreased staff churn
Why outsource your packaging
Outsourcing your packaging gives you and your staff access to a team of salary packaging experts and systems that help remove the burden of risk from you and your team.
Risk Management:
Offering salary packaging, while worth it, comes with risks associated with Fringe Benefit Tax and statutory requirements to remain compliant with relevant tax legislation. Creating a comprehensive in-house salary packaging program can seem daunting and overwhelming for HR and payroll departments who have limited experience in FBT and administration of salary packaging.
Lack of specialised knowledge in the field increases the likelihood of:
- High administrative costs
- Operational inefficiencies
- Compliance issues
Packaging with Simplygreen means you receive:
- Total account management, with oversight and assistance in administration and implementation of your salary packaging program, with a key account manager to oversee the program and support you when needed.
- Quality reporting, we will administer any relevant finance and tax reports throughout the year that are easy to ready and comply with your reporting deadlines.
- Tax and risk management – ensuring that you’re compliant with current tax law is essential to avoid costly tax debt exposure. Our specialists prioritise remaining up-to-date with legislative changes as they occur, ensuring that you are compliant and informed about any issues that impact your business. Simplygreen’s account management team are able to provide you timely expert assistance in relation to any issues surrounding salary packaging, queries and ATO guidelines.
Costs:
Simplygreen salary packaging is set up in a way that is cost neutral to you as an employer. Any associated fees with salary packaging, novated leasing and FBT liability fall onto the employee, so offering a salary packaging costs employers nothing.
Using an external provider can be a key way for you to save on your organisation’s bottom line. By outsourcing, you remove the extra costs associated with the administration and operations of running your own salary packaging program.
Education:
Having access to Simplygreen’s salary packaging and novated leasing experts means that your employees are empowered to make the most of the salary packaging options available to them to suit their lifestyle and financial needs. Our team is able to provide employees with a comprehensive understanding of salary packaging and how it can benefit them, as well as provide ongoing support.
Our education and account management team are dedicated to ensuring your employees are well informed of their salary packaging program, and we have a number of engagement and employee events to reach your employees directly, such as lunch and learns and on-site visits.
Access:
Working with an established salary packaging provider gives employees access to a number of benefits that may not be available to in-house providers. These include our Motorpass fuel cards, Beyond Bank salary packaging cards, vehicle procurement partners, fleet pricing and a comprehensive rewards program.
How to set up salary packaging:
- Employer agreement & Onboarding
To make an inquiry regarding setting up your business with Simplygreen click here, our account management team will reach out to you for a discovery call where we can assess the needs of your business. We only need a form or two to initiate your setup, following which we can schedule an additional onboarding meeting. During this session, we will provide guidance on the administration of salary packaging and novated leasing through your payroll. Our team will also contact you with various options to effectively educate your employees about the new benefit they now have at their disposal. - Employee inquiry and setup
Each employee who reaches out to Simplygreen has the option of receiving a personalised consultation to explain the costs and benefits of salary packaging. From there, your employees will sign an agreement outlining the benefits received and the corresponding salary packaging deductions. We pass on the relevant pre and post-tax deductions, as well as the time period for the contributions for your action, and invoice you according to your payroll cycle for the funds. - Ongoing account management and disbursement
Clients with novated leases will benefit from a designated running cost account managed by Simplygreen, covering finance, fuel, maintenance, insurance, and registration expenses. Reimbursement forms can be submitted through our online request form at any time, with processing completed within four business days of receipt. For customers with salary-packaged exempt items, disbursements will be issued within two business days of Simplygreen receiving the funds.
Salary Packaging as a non-for-profit
As a non-profit organisation, you and your employees can enjoy additional benefits through salary packaging, thanks to the extended concessions from the ATO. Your organisation may qualify for a complete exemption from paying FBT up to $30,000 or receive a rebate on the FBT payable. This enhances the attractiveness of salary packaging items such as mortgage, rent, and credit cards for your employees.