Did you know that working for a Not for Profit organisation can save you money?
Salary Packaging for not for profit employees is one of the most significant financial benefits of the job. Salary sacrifice agreements between you and your employer allow you to increase your income by paying for certain expenses using pre-tax dollars.
Not for Profit (NFP) employees are eligible for higher-level discounts and cost exemptions that are not available to private-sector employees.
Not for profit organisations with a charitable intention have tight budgets and scarce funds compared to private companies. Thus, cash benefits aren’t always practical.
However, salary packaging provides an opportunity for not for profits to employ such staff incentives without tapping into charity funds.
Australia has about 600,000 not for profit organisations. That’s a lot of charities playing a critical part in the country’s economy. NFP staff can use a salary package to get greater value from their take-home pay.
If you work for an NFP organisation or are looking to break into the industry, here are the salary packaging benefits you can get your hands on.
How much can a not for profit employee salary package?
For most employees of not-for-profit organisations, income tax is usually taken from your salary before you spend it.
Whilst a salary package doesn’t change your overall salary amount, employees pay for selected general living expenses before they’re taxed—expenses they would’ve paid anyway, after tax.
Once you and your employer approve the agreement, part of your wage is ‘packaged’ into pre-tax dollars to pay for general living expenses. No income tax is payable on this money, and it comes at no additional cost to the employer.
NFP employees can package up to $15,900 annually.
For those that get their salary packaged, you will only pay tax on the remaining portion of your salary, significantly reducing your taxable income and meaning you pay less income tax.
Find out how much you could save
Interested in learning how much you could be saving on a new car with the benefits of salary packaging? Use our calculator.
Can a not for profit employee salary package a vehicle?
If you work for an NFP organisation, you can benefit from pre-tax dollars by salary packaging a car.
Cars are generally purchased outright or through finance. But by having a salary package for your vehicle, you’re entitled to more significant savings.
Car packages, also known as a novated lease, can be the most cost-effective way to purchase and run a vehicle. Unlike buying a car outright, novated leasing consolidates all your car essentials into one payment, which is taken from your pre-tax earnings.
The benefits are significant, including savings in tax, vehicle running costs, GST and purchase price.
Another advantage of novated leasing is you’ll have access to a fuel card to help organise all car-related expenses. Novated leases also enable staff to afford business car models that would otherwise be out of their price range if they were purchasing outright.
Salary-packaged vehicles can be used for both business and personal use.
Can a not for profit employee salary package mortgage or rent?
NFP staff may also benefit from salary sacrificing mortgage or rent payments tax-free.
Mortgages and rent can both be salary packaged to increase your take-home disposable income. Other regular fixed-amount expenses, such as school fees and loan payments, may also be paid for from your pre-tax dollars as part of a packaging arrangement.
Other personal expenses that can be salary packaged include:
Regular claimed expenses such as credit card payments.
Flexible everyday expenses such as bills, groceries and fuel.
Remote area benefits.
Not for profit salary packaging benefits
Escape fringe benefits tax
Many NFPs have some exemptions from fringe benefits tax (FBT). An employer usually would need to pay fringe benefits tax when non-cash fringe benefits, such as laptops, cars and phones, are paid for on your behalf and used for personal use outside work.
NFP organisations benefit more than private or “profit” companies because they can offer non-cash benefits at a lower cost, making salary sacrificing much more attractive to employees.
Tax laws such as fringe benefit tax differ depending on the business and personal circumstances, like your annual gross salary. We cannot provide professional advice on taxable income or otherwise. For more information on fringe benefit tax, we highly recommend seeking taxation advice from an experienced tax accountant.
Other benefits of package salaries
Organisations that provide salary packaging benefits attract and retain employees better.
For a similar cost to the employer, your money goes further as an employee.
As an employer, you can provide fringe benefits without having to pay extra tax for them.
Easi can help make salary packaging work for you
A packaged salary can be a massive benefit for NFP workers - certain everyday expenses, mortgages, and even car payments can effectively use a pre-tax wage, providing an excellent way for employees to save.
EasiFleet has 20 years of experience in the car leasing industry, meaning we can use our knowledge to deliver effective business car solutions every time. If you want to reap the less-tax benefit rewards of a novated lease or salary packaging, contact our staff for more information on how we can help.
Try our novated lease calculator to see how much you can save!
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