Salary packaging is where an employer and employee agree that the employee’s remuneration package will be received by way of a combination of cash salary and non-cash benefits.
Anyone who is employed and has permission can receive a salary package, which has the potential to save them thousands of dollars annually.
Government employees can also be eligible for salary packaging - which can provide some excellent benefits. However, there are many questions surrounding the topic. This guide aims to answer the most common salary packaging questions for government employees.
How does government salary packaging work in my state?
As a process, salary packaging is similar for government employees from all states. Applications for salary packaging needs to be approved by the Australian Taxation Office (also known as the ATO), which then lets you use your pre-tax income for purchasing certain items.
Certain limits around the total sum of salary packaging and what can be purchased with it as a salary sacrifice may differ slightly from state to state, but for the most part, everything is the same.
Employees have the option to receive a portion of their taxable income in another kind of benefit prior to applying income tax, as opposed to receiving a gross income on which income tax is due. These are referred to as employee benefits.
What are the eligible benefits of salary packing for government employees?
Whether you work somewhere in the west in Western Australia (WA), the east in New South Wales (NSW), south in South Australia (SA), or north in the Northern Territory (NT), government employees can get a wide range of benefits from salary packaging. Here are just some of those benefits.
Novated leasing
One of the most common forms of salary packaging is to assist in the purchase of a car through a novated lease. This form of car lease is an excellent way to save on both the upfront vehicle purchase price as well as the ongoing running costs of the vehicle.
The team at Easi are experts in the field of quality novated leasing - get in touch with our team to find out more.
Superannuation
Building towards your future is just as important for government workers as it is for all other workers, and being able to put more into your superannuation fund is always enticing. Some salary packages will allow for making additional super contributions from your pre-tax salary, helping you work towards having a sizable fund come retirement.
Work equipment
If you work remotely on a relatively consistent basis, you may need to purchase equipment to be able to perform your tasks. Computers - particularly laptops - are a prime example of this, as they can come at a decent cost.
If you’re able to prove that you use such equipment primarily (or solely) for your job, then you may be able to save a significant sum of the price of said equipment through a salary package.
What limitations and guidelines apply to salary packaging for government employees?
Salary packaging caps and thresholds
One of the most important considerations for government employees is making sure that they stay well within their salary packaging caps and thresholds. Depending on your state, these may differ slightly - as does the ATO taxation structure. It’s always wise to consult an expert to make sure you remain compliant with all relevant laws and regulations.
Benefit restrictions for government employees
When you’re considering what benefits you can receive through a salary package, remember that there are some restrictions with regard to certain kinds of benefits. Depending on the state or territory in which you work, certain items may not be eligible for pre-tax payments - including housing and electricity bills, as well as entertainment expenses. Make sure to check local regulations before moving forward with any arrangement.
How does fringe benefits tax work for government employees?
What is fringe benefits tax?
Fringe Benefits Tax (or FBT) is a tax that’s applied to some of the benefits received by government employees. Such benefits can include cars, property and entertainment expenses as well as any other taxable items that are received through a salary package.
FBT is calculated depending on your income level and also varies from state to state. It’s essential to make sure you stay within the relevant guidelines when it comes to this kind of taxation, or else you could be facing hefty fines further down the line.
Fringe benefits tax for government employees
FBT for government employees works in much the same way as it does for other employees, with a few minor variations. Depending on your state or territory, you may be able to claim specific items under the FBT umbrella - but always make sure to check the relevant regulations before doing so.
Have your government salary packaging made easi
If you’re a government employee that’s looking to package some major purchases AND has more peace of mind when you pay taxes, we are able to help. This guide scratches the surface of how salary packaging can benefit you, but there’s even more information we can help with.
Easi’s highly-experienced team has the knowledge and history to ensure you can get the most out of salary packaging as a government employee. If you’re keen to start that journey, get in touch with us today to learn more.
