Salary packaging allows employees to reduce their tax payments at no cost to your employer by paying for items with your pre-tax salary. Salary packaging allows you to restructure your existing salary by choosing to receive it as a combination of take-home pay (cash) and a mix of approved fringe benefits that are paid out of your pre-tax salary. This will effectively reduce your taxable income, and therefore the amount of tax you pay.

For example, your salary package could include a car lease. Your employer would pay the car lease on your behalf using your pre-tax salary. However, as you are now receiving less cash, you pay less PAYE income tax.

Salary packaging can be a tax-effective way of getting more out of your pay and in essence, increase the value of your salary. Salary packaging is very flexible and at the discretion of your employer, it can be tailored to your current situation and future goals.

There are a wide range of benefits that can be included in salary packaging including,

• superannuation

• car benefits, for example motor vehicle leasing

• loan related benefits

• childcare and recreational facilities

• income protection insurance

• employee share plans

• membership fees and subscriptions

• laptops, notebooks, electronic diaries and other similar portable computers and employment related software

The benefits you can salary package are dependent upon your field of employment, and at the discretion of your organisation and the financial planners at Intellichoice can assist in providing you with insights and tips on how this can be used to your advantage, thus getting the most out of your salary.

Salary packaging offers many significant advantages to both employers and employees.

Benefits of salary packaging to employees include:

• Potential to achieve substantial and legitimate taxation savings

• Reduction or removal of liabilities such as the Superannuation and Medicare Surcharge levies

• Flexibility to choose a remuneration structure based on your individual needs and preferences

• Integration of personal financial planning and salary packaging

Benefits of salary packaging to employers include:

• Significantly reduces employment costs such as Payroll Tax and Worker's Compensation

• Increases your franking account, which allows increased tax-paid dividends to shareholders for no additional cash outlay

• Enables you, if required, to provide selected employees with a 'de-facto' pay rise of up to 50% per annum for no additional cash outlay

• Can assist you in attracting and retaining the best staff

• You can design a more efficient incentive program

• Allows you to communicate Total Employment Costs to employees, beyond simple salary (cash-pay) costs

• Your employees can alter their packages to accommodate change - without you incurring additional or unnecessary costs

• Provides for a more effective control of remuneration costs

• Manage human resources' costs as normal budgeted business expenses

• A cost efficient option

For more information about salary packaging or salary sacrificing and how it can reduce your tax payable, speak to one of the financial planners at Intellichoice on 1300 55 10 45 to find out whether this option is the best solution for you.