Salary Packaging for employees – a great way to accumulate wealth tax effectively!
Salary Packaging is for executives and managers only right? WRONG!
All employees should be considering salary packaging as a great way to
- save tax
- contribute to super
- save quicker
- invest more
- accumulate wealth!
Did you know that for as little as $240 a week you are maximising your superannuation savings, which could be invested in investments of you choosing, property, your ideal share portfolio?
What can you salary package tax effectively?
- Laptops
- Mobile Devices
- Superannuation
- Motor Vehicles
The above benefits have the better tax benefits. You can package any other benefits, however these will attract Fringe Benefits Tax of 46.5%, and this may not be tax effective.
How does it work? Most things we buy include GST. When you are an employee you generally can’t claim the GST back, so the employer can claim that on your behalf. Further, businesses can claim a higher percentage for laptops, mobiles, superannuation and motor vehicles than we can as individuals.
How does salary packaging increase my wealth?
Well we’ve saved at least 15% in the example of an employee earning more than $57k a year, and as much as 30% for higher income earners.
These additional funds in super earn investment income only taxed at 15%, not your individual rate of 30-45%.
The kicker is when investments are sold in super pre retirement, tax is only 10%, not 15-23% in your individual or trust name.
What happens if you saved it until retirement, then its tax free when sold, and tax free when you withdraw. Why would you bother saving in your own name with these opportunities?!!?
Talk to us about how to manage your cash, savings and tax more sharply!
Nathan Morris is a Fellow of the Taxation Institute of Australia, and associate of CPA. He has over 13 years experience in tax and business advisory services. Nathan's difference is in educating his clients and extended network all things tax and business to "get ahead".
Establishing his own practice in 2007 he has grown this small tax practice into a successful tax and business advisory practice with over 5 staff servicing over 600 clients.