Salary Packaging is an arrangement between an employee and their employer, to create a more flexible and valuable remuneration package. It involves the employee forgoing a portion of their taxable cash salary in exchange for non-cash fringe benefits provided by their employer.

This allows you to achieve a financial benefit from salary packaging your day-to-day and lifestyle expenses from your pre-tax salary (which would normally be paid from your post-tax disposable income).

Available benefits may include:

• home mortgage payments
• superannuation contributions
• motor vehicles (including running costs such as fuel and servicing)
• daily living expenses such as groceries, home utility bills, etc (via Southgate Everyday Purchases Card)
• dining out meal expenses (‘meal entertainment’)
• laptops and portable electronic devices
• child’s school fees
• and more

Fringe benefits are paid using your pre-tax salary, meaning no Income Tax is payable on the sacrificed funds (unlike a cash salary). A Fringe Benefits Tax (FBT) may apply to the fringe benefits; however some benefits are FBT exempt or subject to concessional treatment, providing a greater potential tax saving. Any applicable FBT is deducted from your pre-tax salary and held by your employer for periodical remittance to the Australian Tax Office.

Salary packaging allows you to restructure your remuneration to increase its tax effectiveness. By paying your fringe benefits pre-tax, salary packaging reduces your Income Tax burden, and therefore increases your net disposable income.

You may also achieve secondary advantages from establishing a salary packaging arrangement, which are detailed under Employee Benefits.

The advantages you can achieve will vary according to:

• your employer's industry sector (eg. Private Sector, Government, Public Health, Rebatable, Charities)
• your employer’s salary packaging policy
• your personal financial circumstances
• your chosen fringe benefits

Southgate assists your employer in creating their own Salary Packaging Policy, which regulates issues such as:

• which employees are eligible to salary package
• which fringe benefits are offered
• any required limitations (such as maximum income that can be packaged, luxury car restrictions, etc)
• treatment of GST Input Tax Credits (ITCs)

When establishing a salary package with Southgate, we will advise you of the available options and your employer’s salary packaging policies.

The provision and administration of salary packaging is regulated by the Australian Tax Office (ATO) and various legislation, regulations and rulings. Salary packaging is 100% legal and the ATO website (www.ato.gov.au) has an extensive archive of salary packaging publications and information on how it works.