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At first glance,the term “salary sacrificing” sounds like something you’d very muchnotwant to do. I don’t know about you,but I sacrifice enough of my salary every month on the bloody mortgage!
In reality,salary sacrificing,or salary packaging,is a relatively good thing,at least from a tax perspective. In short,it involves you foregoing a part of your take-home pay (hence the sacrifice) in return for various benefits from your employer. Most commonly,these benefits include superannuation,motor vehicles or items such as laptops or phones.
Salary sacrificing involves foregoing part of your salary for benefits from your employer,such as cars or superannuation.Aresna Villanueva
The main benefit of salary sacrificing,explains H&R Block’s director of tax communications,Mark Chapman,is that it reduces your taxable income,so you pay less tax. For things such as car leases,you can also include all the running costs in your lease payments,rather than having to shell out separately for petrol,and you can save on GST.
What’s the problem?
Data on how many of us salary sacrifice is scarce,but it appears to have become more popular over time,with 11 per cent of Australians opting to use the scheme in 2006 compared to However,the concept is still relatively poorly understood,which means many taxpayers could be missing out on the potential benefits.
What you can do about it
If you’re thinking about salary sacrificing and want to know more,read on:
Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.