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NALSPA has encouraged Australians to consider salary packaging options for the next financial year to mitigate the impact of increased living costs.
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Boost savings this FY by salary packaging: NALSPA
15 July 2024
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With people now submitting their tax returns, NALSPA is reminding Australians of the benefits of financial planning and salary sacrificing on annual incomes.
NALSPA chief executive Rohan Martin said now is the perfect time to consider the following financial year and make specific choices to gain advantage of pre-tax strategies.
“The new financial year is a time where many of us think about the amount of tax we are paying as well as our household budgets. We all try to find ways to save money especially as the cost of living continues to bite hard,” he said.
NALSPA has highlighted the importance of salary packaging and how this improves the financial wellbeing of Australians, especially when tackling higher cost of living.
There are multiple possibilities and areas in which Australians may be able to receive salary packages, based on their sector and industry.
Items that may be able to be salary packaged include rent, cars, mortgages, superannuation, health insurance, laptops, schooling costs and childcare fees.
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Martin said there is only so much people can do when it comes to working every day, which is why salary sacrificing is an option to ensure work/life balance.
“Many workers are stretched to the limit – there’s only so many hours in a day to pay the bills and other everyday expenses,” he said.
“But a lot of workers also may not realise that they can potentially increase their take-home pay very simply through salary packaging, otherwise known as salary sacrificing, where they can use pre-tax dollars to pay for selected expenses and save money in the process.”
NALSPA believes salary packaging saves workers thousands of dollars a year. For example, a charity worker earning $70,000 per year and salary packages about $18,500 in rent and meal entertainment costs could potentially get an extra $5,800 extra per year, it said.
“If you’re looking to buy your first home or boost your retirement savings, putting some of your pre-income tax into superannuation via salary packaging can be a great option,” Martin said.
The Australian federal government provides an exemption from fringe benefits tax on an eligible electric vehicle under the electric car policy. Australians could save between $3,000 to $5,000 a year through this policy, as it highlights a GST payment is not required for the purchase and running costs of an EV.
Martin said novated leasing of a car can be a smart move when planning financial income.
“Salary packaging a car, also known as novated leasing, is one of the most popular benefits and we’re seeing this accelerate rapidly as a result of the federal government’s FBT exemption on eligible electric and plug-in hybrid vehicles,” he said.
“This policy, combined with the financial benefits of novated leasing, can save thousands of dollars off the cost of owning and running the family car – one of the biggest expenses for most Australian households.”
To salary package efficiently, NALSPA recommends using the current tax time to assess financial position and financial goals as well as researching salary packaging and how it may be beneficial.
The Gallagher 2024 Workforce Trend Report showed there had been an 8 per cent increase in the number of employers offering forms of salary packaging in Australia.
“As employers navigate their own challenges including the economy and workforce shortages, they’re noticing more than ever the value of offering salary packaging as a meaningful way to attract and retain good staff, ensure employee wellbeing and remain competitive at no cost to them,” Martin said.
Employees who are considering salary packaging for the next financial year should speak with their employer about potential packaging policies and offers, seek professional advice and monitor their salary package over time, said NALSPA.
Martin said more Australians should consider salary sacrificing to “boost tax savings” and “put more money in your pocket.”
“While awareness of and access to salary packaging is growing there still is a long way to go for more employers and employees to understand and realise the potential benefits."
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