Employee Handbook
Salary Packaging
This handbook provides comprehensive information to employees interested in the salary packaging options offered by your organisation. The offers in this handbook are available to all employees.
TRINITAS provides technical advice on a wide range of salary packaging benefits that match both your organisation’s tax status and objectives and you, the employee’s, best interests.
Our advisers have the technical expertise to set up your remuneration package structure, part of which includes discussion around the basic elements of salary packaging, providing a full explanation of the available benefits, package strategies, as well as providing examples.
While there are numerous elements that can be included within your salary package, by far the most popular benefits are associated with this form of tax minimisation are vehicle leases and superannuation.
We ensure these benefits are regularly reviewed and benchmarked against ‘best practices’. And in the event of any taxation changes, or to guarantee efficient management, your organisation reserves the right to make appropriate modifications.
You may structure your package, given the information and parameters set in this handbook, along with the support of your TRINITAS adviser.
If you decide that you would like to take advantage of the salary packaging options available to you through your organisation, TRINITAS’ salary packaging management team will step you through your options and the best way to apply them to your individual situation.
DEFINITION
WHAT IS SALARY PACKAGING?
Salary packaging is a remuneration structure that allows your employer to provide you with tax exempt or concessionally taxed benefits other than a cash salary. In this context, a benefit is defined as the payment or provision of goods or services by an employer on behalf of its employee.
The ATO recognises salary packaging as a legitimate form of taxation planning.
Salary packaging allows you to receive non-cash payments as part of your remuneration in the form of fringe benefits over the top of the cash salary.
The main purpose of this type of compensation scheme is for an individual to get the most out of the net remuneration (after tax income). In deciding to get paid with benefits in place of monetary income, employees can defer standard taxation rates by opting for fringe benefits.
Salary packaging offers you the opportunity to achieve tax benefit advantage by reducing the tax payable on your salary thus maximising after tax income.
A broad range of employee benefit options that best suits their own situation.
OUR Approach
A successful salary packaging arrangement is the result of a comprehensive assessment of your financial needs and you will have the opportunity to thoroughly discuss your salary packaging requirements and seek the technical advice of your TRINITAS advisers.
HOW DOES IT WORK?
TRINITAS will manage the salary packaging process and supervise payment for your organisation. There are a number of forms that you will need to complete to take up your organisation’s offer of salary packaging. Completed forms are sent to your payroll department following which your new remuneration structure will be determined.
Once your package has been implemented, TRINITAS will provide you with the support you require in all matters concerning your salary package.
WHO PAYS ME?
Payroll functions in relation to your salary packaging (including the particular benefit, lease payment and allowances) will be managed and paid via TRINITAS. However, the payment of your net pay and superannuation will remain with your organisation’s payroll department.
A successful salary packaging arrangement is the result of a comprehensive assessment of your financial needs and you will have the opportunity to thoroughly discuss your salary packaging requirements and seek the technical advice of your TRINITAS advisers.
PROVIDING INFORMATION TO TRINITAS
You will be able to provide and access the following information via our online services:
• Transaction statements
- Application forms
- Maintain motor vehicle logbooks
- Record vehicle odometer readings.
OUR Process
1
Attend a group presentation detailing the various benefits available
2
Engage in an individual consultation discussing expected outcomes
3
Complete the application requirements
4
Receive a disclosure report on the completed salary package
FAQ's
1. Why has my employer introduced remuneration packaging?
Remuneration packaging will benefit everyone involved and it is considered to be best practice in the field of employee remuneration.
For Existing Employees:
- An increase in after-tax remuneration
- Flexibility to package his/her remuneration to best meet his/her individual and family needs
- Improves cash flow for the household.
For New Employees:
- Your employer will be a more attractive employment option.
- The ability to increase employee’s after tax income without increasing payroll costs.
- Meet individual preferences and needs of employees in their financial arrangements.
- Enhance their attractiveness as an employer.
- Utilise Government policy, intended benefits and exemptions.
2. Who is eligible?
Salary Packaging is open to all permanent and permanent part-time employees. Casual and externally contracted employees will also be eligible, however, we ask you to confirm with your Employer before proceeding.
3. Is remuneration packaging compulsory?
No. Remuneration packaging is entirely at the discretion of the eligible employee.
4. Do employers and employees in the general community in the public and private sectors utilise remuneration packaging?
Yes. An ever increasing number of employers in both sectors utilise packaging to remunerate employees.
5. What is the view of the Australian Taxation Office on remuneration packaging?
The Australian Taxation Office recognises remuneration packaging as a legitimate tax planning measure (Fringe Benefit Tax Assessment Act 1986).
6. May an eligible employee change the election of benefit payments within his/her packaging regime?
Yes. Benefits to be paid by the employer from the employee’s Expense Benefit Payment Account may be changed by the employee as often as required. Such changes will be noted on a payment advice, completed by the employee.
7. Will remuneration packaging have a negative impact on:
- Superannuation payment and benefits?
- Annual leave payments and accruals?
- Sick lease payments?
- Long service leave payments?
The base salary received before packaging continues to be used for the calculation of compulsory superannuation contributions and benefits and for the calculation of entitlements on ceasing employment with your employer.
8. Will salary packaging affect and Family Tax Benefit that I currently receive?
No. There maybe even be circumstances where these payments may increase as a result of packaging. We suggest that you consult the Family Tax Benefit website at www.humanservices.gov.au/customer/dhs/centrelink.
9. Will an eligible employee have less coverage under Workcover if he/she takes the option of remuneration packaging?
No.
10. What happens to salary and expense benefit payments when an eligible employee takes holiday?
Expense payments will continue to be paid by your employer so long as the employee is still drawing a salary or wage.
11. What happens when an eligible employee takes leave without pay?
The employee will have to make the necessary private arrangements for payment of expenses during this period.
12. What happens when eligible employees cease employment with an employer?
On ceasing employment, employees who have a credit in the Expense Payment Benefit Account may either:
- Use the existing credit to pay for an expense already incurred, up to the balance remaining in their Expense Payment Benefit Account; or
- Receive the balance of the credit in that Account in cash, in which case the funds will be treated as salary or wages and will be subject to PAYG taxation.
13. Will your employer offer assistance to eligible employees to determine their initial packaging regime?
Yes. Your employer has engaged remuneration specialist TRINITAS to ensure all packaging regimes meet statutory and taxation requirements.
14. Can I accrue funds in my Expense Payment Benefit Account?
Yes, however surplus funds must be cleared by the end of the Fringe Benefit Tax year, ie 31 March each year. If funds are not cleared, they will be paid out as salary and taxed accordingly.
15. How are HECS fees calculated for a packaged employee?
All expense benefits paid as part of a remuneration package between 1 April and 31 March will be gross up and include on PAYG summaries for that financial year. To this effect, all expense benefits paid will be grossed-up and include with the gross salary for purposes of determining the amount of HECS payable. Please note that as taxable income is reduced throughout the year, a voluntary deduction may be required.
16. Am I liable for tax on the remuneration packaging if I take the option to package?
Yes. Any income tax or fringe benefit tax applicable now or in the future will form part of your total remuneration.
17. If I utilise a car as a benefit, will I have ownership of the car?
Yes, where either the Novated or Associate Lease methods are used.
18. What details will I have to provide?
All the information that we require is requested on information sheets that will be given to all eligible employees prior to his or her appointment with a remuneration consultant. Our ability to provide you with the best quality advice depends on the quality of information that is provided to us.
19. Is remuneration packaging confidential?
Yes, like all personal details, package details will remain confidential. The agreement you sign is between yourself and TRINITAS. Legally, we are not able to share your package or other information with anyone else.