Salary Sacrifice or Salary packaging is a tax effective way of receiving your salary as a combination of income and benefits. Salary packaging allows you to deduct some of your pre tax income and use it to pay for benefits such as mortgage, car loans etc. By reducing your pre tax income you can reduce the amount of income tax you pay and increase the amount you take home each fortnight. You can sacrifice up to $17,000. All full time doctors are eligible. However, VMO's have different packaging arrangement to other doctors.
What can You Salary Sacrifice towards?
- Novated leasing of a motor vehicle
How does it work?
Kate earns an annual salary of $45,000 per annum (excluding her employer's super contributions) and is considering salary packaging additional superannuation. By choosing to salary package an additional $5,000 into her superannuation, rather than paying for it from her post-tax salary, Kate could increase her net disposable salary by $1,575 per annum or $60 per fortnight.
How do You arrange it?
Tricks and Traps
If you move from a public to a private hospital (and maybe even if you work part time in one), even if you are paid by Queensland Health (e.g. VTA) you may cease to be eligible to salary sacrifice. You may only find out about this after you receive a recoupment bill from Queensland Health. Your own circumstances will determine whether salary packaging will be a benefit to you. There are tax implications which will make some benefit items unattractive for some people, so it is important to discuss your chosen benefits with a financial adviser prior to starting work.
Published Date: June 24, 2016
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