As an employer you know that an employee’s salary is just the beginning of the costs. Additional costs can go well beyond basic recruitment and training costs, to include expenses such as Workcover Premiums, Payroll Tax, Superannuation, work related allowances and more. Salary packaging can reduce all of these costs in particular circumstances, and Southgate can assist you in identifying these additional benefits.

Save on the following employment costs:

Payroll Tax
Payroll Tax is levied on total remuneration including the value of Fringe Benefits; however many benefits are not included in the levy as they are either:

• ‘not reportable’ under law;
• exempt due to the nature of the benefit (eg. work-related or ‘otherwise deductible’); or
• have a reduced or nil value for reporting purposes due to applicable concessions (eg. Novated Leases under the post-tax contribution method).

Payroll Tax is levied at a rate of approximately 5%, which means your organisation can save up to 5% of the amount of salary an employee packages towards certain fringe benefits.

Workcover Premiums
Workcover Premiums are calculated based on total remuneration using the same or similar method as Payroll Tax (note: slight variations exist between different States). As such, employers can reduce their Workcover Premiums in the same manner that Payroll Tax savings can be achieved.

Superannuation
The amount of compulsory superannuation contributions payable on salaries (by employers) may be reduced in some instances under a salary packaging arrangement.

Although it is customary for employers to agree to pay employee superannuation contributions based on the Gross Salary before salary sacrificed amounts, this is not a legal requirement. Any policy deviating from this custom should be clearly communicated to employees before they commence salary packaging.

Work Related / “Otherwise Deductible” Expenses
Offering salary packaging allows certain business-related expenses (eg. Airport Lounge Memberships, Laptops and Ipads etc) to be included within an employee’s salary package.

As these expenses are deducted from an employee’s salary, it gives you greater flexibility to offer employees higher value expenses at no cost to the organisation, while still providing a financial benefit to the employee. For example, an employee can choose a more expensive laptop than would normally be provided by their employer, as the cost is ultimately borne by the employee (tax free).

Work related or ‘otherwise deductible’ expenses can also reduce Payroll Tax and Workcover Premiums, providing an additional incentive for providing these expenses via a salary packaging arrangement.