Salary packaging as a business tool: Debunking the myths
Instead of just complying with the fringe benefits tax legislation, why not use it to your advantage? Salary packaging can maximise take-home pay and attract talent.
Could salary packaging be a cost-effective way to attract and retain talent?
By combining cash salary with other benefits, organisations have greater flexibility to negotiate remuneration , but that’s just one of the advantages of salary packaging. Many people don’t know that the strategy can also be used to obtain tax benefits. As a whole, the fringe benefits tax (FBT) provides a legal framework that companies can use to manage costs and talent, building a strategic platform for recruitment and retention.
The first step to effective salary packaging is understanding how some simple FBT strategies can benefit businesses. Here are five of the most common myths that could be holding companies back from attaining these rewards.
Did you know that employees can salary package FIFO costs?
The recent John Holland v ATO case surrounding the deductibility to Fly-In-Fly-Out costs has put the whole FIFO sector back in the headlines. With the ruling overturned, it’s highlighted how companies can benefit when applying the Fringe Benefit Tax (FBT) rules properly and in a compliant way.
While this decision, and subsequent successful High Court appeal, does not affect the majority of FIFO arrangements, this case has highlighted a number of rules that need to be adhered to when providing these benefits to your employees.
The place of work must be designated as Remote as per s140. Interestingly, this was a major argument in the ATO’s case against John Holland, that Geraldton WA is an Eligible Urban Area and as such is Non-Remote
The employee’s work roster must be variable or rotating. Not simply fly-in Monday and fly-out on Friday.
A full list of remote and non-remote towns appears on the ATO website.
Do you know that your employees can salary package FIFO costs?