As Australians begin to submit their tax returns and plan for this financial year amid the heightened cost of living, NALSPA is encouraging workers and their employers to consider their salary packaging options.
The National Automotive Leasing and Salary Packaging Association (NALSPA) chief executive Rohan Martin said it is timely to think about taking advantage of pre-tax pay strategies that can help boost tax savings and put more money in your pocket.
“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,” Mr Martin said.
“Many workers are stretched to the limit - there’s only so many hours they can work in a day to pay the bills and other everyday expenses. 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.
“If you’re looking to buy your first home or boost your retirement savings, putting some of your pre-tax income into superannuation via salary packaging can be a great option.
“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. This policy, combined with the financial benefits of novated leasing, can shave thousands of dollars off the cost of owning and running the family car - one of the biggest expenses for most Australian households.
“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.
“Evidence shows the most important consideration for workers when deciding to join a new organisation is the remuneration, reward and benefits on offer. On top of this, we know there’s a significant gap between importance and satisfaction when it comes to the salary, incentives and benefits that workers, particularly women, receive.
“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.”
Quick facts:
- Depending on the sector and workplace, employees may be able to salary package everyday items such as their rent, car, mortgage, superannuation, health insurance, laptops, school or childcare fees.
- Salary packaging can save workers thousands of dollars every year. For example, a charity worker who earns $70,000 per year and salary packages about $18,500 in rent and meal entertainment costs could potentially take home more than $5,800 extra each year.
- Likewise, a nurse earning the same income and packaging about $11,600 in costs could potentially take home an additional $3,595 extra each year.
- Under the federal government's Electric Car Discount Policy, you are exempt from Fringe Benefits Tax on an eligible electric vehicle. On top of this through novated leasing you also pay no GST on the purchase price or the running costs of the car. This could save you between $3,000 - $5,000 a year on a new EV.
- According to global consulting firm Gallagher’s 2024 Workforce Trend Report, there has been an 8 per cent increase in the number of Australian employers offering salary sacrifice (excluding superannuation) options over the last year.
- NALSPA members directly help around one million Australian employees to utilise their pre-tax salary to package a number of different employment-related benefits. NALSPA is spread across the corporate, charitable and government sectors.
NALSPA’s Top 5 Salary Packaging Tips for workers:
- Use this tax time to assess your financial goals and taxation position
- Do your homework about salary packaging via reputable sources such as www.moneysmart.gov.au
- Speak with your employer or their salary packaging provider to understand your employers policies and offerings
- Seek professional advice such as your accountant or tax agent
- Monitor and adjust your salary package over time.
Media contact: Sofie Wainwright 0403 920 301