Individuals need jobs in order to match their expenses and needs. Because of this some employers are looking for ways that can help them and their employees. And, one of the most popular options is by using salary sacrifice.
Salary sacrifice is offered by employers to their employees as part of voluntary benefits. With this plan, it can reduce an employee’s salary in exchange for the benefit. To help you understand salary sacrifice better, below are some things you need to know.
Benefits of salary sacrifice plans
As of now, there are two main benefits of salary sacrifice plans employees can obtain. These include:
Fringe benefits – Fringe benefits are payments of the employee but work differently to salary or wages since these benefits are used to provide employees with rights, privileges and services.
Superannuation – The next benefit employees may obtain when opting for salary sacrifice is superannuation. With this, you can save more money in your fund when you retire, for less money contributed. However, a salary sacrifice arrangement is Fringe Benefit Tax exempt.
Salary sacrifice is offered by employers to their employees as part of voluntary benefits. With this plan, it can reduce an employee’s salary in exchange for the benefit. To help you understand salary sacrifice better, below are some things you need to know.
Benefits of salary sacrifice plans
As of now, there are two main benefits of salary sacrifice plans employees can obtain. These include:
Fringe benefits – Fringe benefits are payments of the employee but work differently to salary or wages since these benefits are used to provide employees with rights, privileges and services.
Superannuation – The next benefit employees may obtain when opting for salary sacrifice is superannuation. With this, you can save more money in your fund when you retire, for less money contributed. However, a salary sacrifice arrangement is Fringe Benefit Tax exempt.
What can you attain by opting for salary sacrifice plans?
As mentioned above, salary sacrifice can be used to personal or business purposes. Therefore, employees can make use of this option to purchase certain products or services such as the following.
Cars – Salary sacrifice can be used when buying a new or used cars or even to your existing car. This is possible since both the running costs and the finance payments can be sacrificed.
Contributions – Paying contributions using salary sacrifice can increase the total amount of funds eventually ending up in your super fund, as less tax is imposed on super contributions that are salary sacrificed.
Gadgets – Gadgets like laptops, mobile phones and other gadgets are be paid using your salary sacrifice plan, but these gadgets must be used for work purposes.
Work related expenses – Employees can also pay for work related expenses such as clothes, airline club memberships, tools of trade as well as travel expenses.
Risks of opting for salary sacrifice plans
Unfortunately, opting for salary sacrifice plans also has its pitfalls that employees should be aware of. These include:
Additional taxes – Paying for your contributions using salary sacrifice plans can cause a big surcharge.
Tax levels – Another drawback of using salary sacrifice is higher tax levels since Salary sacrifice contributions will be taxed at 15 percent within your super fund, and maybe even at 16.5 percent on withdrawal.
Knowing all these can help both employers and employees to choose the best salary options which can benefit them. Check this site to know more about salary sacrifice schemes.
As mentioned above, salary sacrifice can be used to personal or business purposes. Therefore, employees can make use of this option to purchase certain products or services such as the following.
Cars – Salary sacrifice can be used when buying a new or used cars or even to your existing car. This is possible since both the running costs and the finance payments can be sacrificed.
Contributions – Paying contributions using salary sacrifice can increase the total amount of funds eventually ending up in your super fund, as less tax is imposed on super contributions that are salary sacrificed.
Gadgets – Gadgets like laptops, mobile phones and other gadgets are be paid using your salary sacrifice plan, but these gadgets must be used for work purposes.
Work related expenses – Employees can also pay for work related expenses such as clothes, airline club memberships, tools of trade as well as travel expenses.
Risks of opting for salary sacrifice plans
Unfortunately, opting for salary sacrifice plans also has its pitfalls that employees should be aware of. These include:
Additional taxes – Paying for your contributions using salary sacrifice plans can cause a big surcharge.
Tax levels – Another drawback of using salary sacrifice is higher tax levels since Salary sacrifice contributions will be taxed at 15 percent within your super fund, and maybe even at 16.5 percent on withdrawal.
Knowing all these can help both employers and employees to choose the best salary options which can benefit them. Check this site to know more about salary sacrifice schemes.