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Salary Packaging Formula:
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Salary packaging (also known as salary sacrifice) is an arrangement between an employer and employee where the employee agrees to receive part of their remuneration as benefits rather than as cash salary. This can provide tax advantages in certain situations.
The calculator uses the salary packaging formula:
Where:
Explanation: The equation calculates the equivalent value of a salary package by accounting for tax savings and added benefits.
Details: Salary packaging can provide significant financial benefits when structured correctly. It allows employees to pay for certain expenses from their pre-tax salary, potentially reducing taxable income and increasing take-home pay.
Tips: Enter your gross salary in dollars, estimated tax savings from packaging, and the value of benefits received. All values must be positive numbers.
Q1: What types of benefits can be included in salary packaging?
A: Common benefits include cars, superannuation contributions, laptops, phones, and other work-related items. The specific options depend on your employer's policies and local tax laws.
Q2: Is salary packaging available to all employees?
A: No, availability depends on your employer's policies, your employment contract, and sometimes your industry (e.g., common in healthcare and non-profit sectors).
Q3: Are there limits to how much I can salary package?
A: Yes, most countries have annual limits on tax-exempt salary packaging benefits. Check with your employer or tax advisor for specific limits.
Q4: Does salary packaging affect my superannuation?
A: It depends on how your super is calculated. Some employers calculate super on your base salary (pre-packaging), others on your reduced salary.
Q5: Should I get professional advice about salary packaging?
A: Yes, it's recommended to consult a financial advisor or tax professional to ensure salary packaging is beneficial for your specific circumstances.