Salary packaging, also known as salary sacrifice, is an arrangement between you and your employer that allows you to pay for certain items with pre-tax dollars. These expenses are reported on your annual payment summaries and help reduce your taxable income, thereby reducing the amount of tax you pay.
Defence employees can package meal entertainment and credit card expenses as well as a variety of other ATO-approved items. ADF salary packaging will also offer a full range of benefits like novated leasing.
Benefits
Being part of the ADF comes with many financial perks beyond your hard-earned paycheque. From superannuation and paid trade qualifications to subsidised housing and homeownership schemes, the ADF offers a range of schemes designed to help you build wealth and secure your financial future. One of these is salary packaging. Also known as salary sacrifice, it is an Australian Taxation Office-approved arrangement that allows you to receive a number of benefits by paying for them with pre-tax dollars instead of post-tax income.
Those eligible for a salary package can choose from a number of different benefits, including novated leasing (cars and running costs), additional superannuation contributions, childcare expenses, memberships and subscriptions, and fees and books related to your job or self-education. You can also save on travel, accommodation and meals by salary packaging.
The exact cost and tax savings of each package will depend on your circumstances and the type of items you include in your package. It’s important to consider the benefits and risks before deciding whether or not salary packaging is right for you.
Tax savings
ADF salary packaging offers great tax benefits for members. These include non-cash incentives such as entertainment and loan repayments, a tax-free car allowance, and a home purchase assistance scheme. Other advantages of working for a not-for-profit organisation include flexible hours and job-sharing opportunities. You can also get access to a range of other benefits, including free healthcare and childcare.
Salary packaging allows you to pay for work-related expenses from pre-tax income, saving you thousands in taxes each year. It is usually more effective for people on middle to high incomes, and it can be a great way to save for a new car or a family holiday. However, it is important to remember that the amounts you sacrifice are added back into your taxable income, and you should seek professional advice before salary sacrificing.
Reliability
Novated leases are a great way to salary package cars and other vehicles and running costs, such as petrol and maintenance. Fleet Network can help South Australian Defence Force employees salary package their cars through novated leases by negotiating discounts with dealers and providing a fully managed, hassle-free service.
Employees should seek advice from a financial professional before making decisions about salary packaging. Some items attract fringe benefits tax (FBT) and can affect government concessions, such as mortgage repayments, non-work-based childcare and desktop computers. The Defence Home Ownership Assistance Scheme provides subsidy payments toward the interest incurred on home loans for members and their families. Employees should also seek independent financial advice before salary packaging their superannuation contributions and novated leases. It will help them determine the maximum benefit of each arrangement.
Flexibility
The ADF offers a unique combination of salary, benefits and flexibility. It is a great option for those who want to align their careers with a greater cause and still earn a competitive salary. However, deciding whether to choose a salary package or not can be a difficult choice. The benefits and costs associated with salary packaging vary between organisations, so it’s important to speak to a financial professional before making a decision.
The main advantage of ADF salary packaging is the ability to reduce your taxable income and increase your take-home pay. Typically, this can be done by allocating pre-tax dollars to certain expenses and benefits such as novated leasing, additional superannuation contributions, education expenses, and more. However, some items cannot be packaged as they attract full fringe benefits tax (FBT). These include mortgage repayments and non-work-based child care.