Salary Packaging - Remserv

Salary packaging is also known as salary sacrificing, and is an arrangement between you and CPL where you pay for some items or services straight from your pre-tax salary. This can reduce your taxable income and put more money into your pocket. We have partnered with RemServ, part of Australia’s largest salary packaging group, to manage your salary packaging arrangements, contact RemServ on 1300 73 66 62 to set up salary packaging.

Participating in salary packaging can reduce your taxable income and put more money into your pocket. This depends on your individual financial circumstances and you should seek financial advice before entering into a salary packaging arrangement. 

Any CPL employees who are full or part time.

The types of benefits that you can salary package depend on your employer and the industry that you work in. At CPL it’s easiest to think of four different categories of things that you can salary package.

1. Items that sit within your FBT cap – you can use up to $15,900* of your base salary pre-tax per FBT year to contribute towards rent or mortgage payments, child care fees, credit card payments, living expenses, personal loan payments, council or water rates, school fees and many more (on this benefits grid, it’s items that sit on the left hand side). If you package a CPL vehicle, the contributions towards this vehicle will sit within this cap.

2. Items that sit outside of your FBT cap – there is no dollar limit to how much you can package here, but there may be specific documents you need to provide, or evidence to prove that the benefit relates to your employment. The types of things you can package here are professional memberships/subscriptions, self-education expenses, portable electronic devices, airport lounge membership, superannuation, income protection insurance etc. (on this benefits grid, it’s the items that sit on the right hand side).

3. Meal and entertainment and venue hire – you can use up to $2,550* of your base salary pre-tax per FBT year to contribute towards dining out with friends or family at restaurants, cafes, pubs, clubs and bistros. You can also use this cap to pay towards hiring a venue for entertainment purposes like holiday accommodation, weddings, birthdays or anniversaries, and the celebration could be for yourself, your spouse or your children. Read more about meal entertainment here.

4. Novated lease – packaging a vehicle and its related expenses. The payments applicable to novated leases may be split between pre and post-tax contributions. Read more about a novated lease here.

5. Bus Travel Benefit - if you use the bus within the Translink network to travel to and from work, you can organise a go Bus Travel Benefit card. Read more about the Bus Travel Benefit here. 

CPL is listed as a charitable organisation (or a Public Benevolent Institution for the purposes of salary packaging) therefore our employees have the ability to package higher limits of their salary which is exempt from Fringe Benefits Tax (FBT) than most other organisations. See above for more details about the amounts that you are able to package.

CPL’s salary packaging partner RemServ will not allow you to exceed your contributions towards items that have an FBT cap imposed on them. Even if more than the capped amounts have been deducted from your pay and sent to RemServ, they will not pay this money towards any benefit items that may attract FBT without discussing this with you and CPL first. If more money has been sent across to RemServ and you don’t have any cap left you have the choice of contributing that money towards other benefit items that don’t sit under the FBT cap, or your can have the money sent back to CPL Payroll and taxed just like your normal salary. If you have a CPL vehicle, it’s extremely important that you let RemServ know that this amount will form part of your $15,900* cap, and you can work with the CPL Payroll team to ensure the correct amounts are being reported to RemServ.

This really depends upon your individual financial circumstances. RemServ have an easy online calculator to help you see how much your potential benefit could be. Read the FAQ ‘what types of things can I salary package’ before proceeding with the calculator to understand the different types of benefits you can package.
The calculator does not include the fees applicable to salary packaging. These payments are deducted pre-tax, and these payments do not form part of your cap. The calculator also does not take into consideration your individual financial situation. It’s recommended that you speak with a tax or financial advisor prior to entering into a salary packaging agreement to ensure that your individual financial circumstances have been taken into consideration.
 

Here is the link to the salary packaging calculator: www.remserv.com.au/salary-packaging/salary-packaging-calculator
 

Setting it up for the first time:

1. Set up salary packaging – speak with RemServ to set up your salary packaging. They will make sure you have all the required forms and paperwork completed to ensure you comply with the regulations. You will need to make sure you provide everything required so that you can get started with your packaging ASAP!

2. RemServ will advise the CPL Payroll team of the amounts to deduct for your packaging, and we will send this money across to RemServ.

3. Each fortnight the CPL Payroll team will deduct these amounts from your pay and send across to RemServ to pay your benefits, the remainder of your pay will be taxed, and your post-tax salary is deposited into your bank account as per usual.

4. RemServ will then receive these funds, then pay them towards the benefits you have nominated either by paying the item directly or reimbursing you for expenses already occurred, depending on the benefit item and how you’ve set it up.

The only exception to the above is if you wish to make additional Superannuation payments. These are best directly organised with CPL's payroll team because then you won’t get charged any additional fees.

If you reach your FBT cap limits, RemServ will not pay this money towards any benefit items within your cap to ensure that you and/or CPL aren’t liable to pay FBT. Once your cap is reached, RemServ will contact you to see what you want to do with the excess funds. You can either ask RemServ to pay it towards benefit items that sit outside of the cap, or you can ask them to return it via the CPL Payroll team. If the funds are returned via the payroll team, they will need to be taxed the same as your regular pay, then deposited into your bank account.

1. Speak with RemServ about the changes you wish to make, you may be required to submit new forms or make other adjustments.

2. Once you’ve submitted the required paperwork RemServ will advise CPL's payroll team of any changes you have made.

3. RemServ advises to allow yourself 2-3 pay periods for the changes to be processed.

Not for profit charity organisations are able to offer their employees a higher level of FBT exemption than private organisations, and even government hospitals. It’s completely legal and ATO approved, we use an external salary packaging provider to make sure we’re not exceeding individuals FBT limits.

The FBT year runs from 1 April to 31 March every year. You need to know this because most of your salary packaging contributions are capped by FBT limits, and these re-set at the start of each FBT year.

It’s a good idea to make sure you’ve maximised your salary contributions within your cap limits to make the most of your salary packaging. If you’re falling short towards the end of FBT year, you could adjust your packaging amounts to maximise your benefits. Don’t wait until the last few weeks of the FBT year (March), make sure you’ve given yourself enough pay periods to put some changes in place if you need to. The end of January might be a good time to review.

Tip: if you’ve just commenced with CPL, or you are just considering salary packaging, you still have $15,900* to use within the FBT year. For example, even if you’ve commenced with CPL in January, you still have a full $15,900* to use until 31 March. Speak to RemServ if you wish to make the most of this!

Salary packaging can still be beneficial if you have a HELP or Education Debt, however it is likely to increase your fortnightly HELP repayment by 1% - 2% of your gross income. This will mean that you start to repay your HELP debt at a faster rate, whilst still making a tax saving.

We suggest that, as your required HELP Debt repayment will increase at tax time, you advise the CPL Payroll team to tax you an additional amount each fortnight so that when the end of financial year calculations are made, a lump sum will be available to make your Education Debt payment. You will also need to advise RemServ that you have a HELP or education debt so that they can set up your packaging correctly.

Find out more here: http://www.remserv.com.au/salary-packaging/how-it-works/hecshelp

Grossed up taxable value (GUTV) means the amount a person would have to earn in order to have a take home pay equal to the amount of benefits salary required to pay the highest marginal rate of tax. As an example, the GUTV of the $15,900 cap is $31,177 (at the time of answering this question). This amount appears on your RemServ statements as the ‘cap remaining’ figure and also appears on your payment summary at the end of financial as a reportable fringe benefits amount. To find out more about this visit the ATO’s website, here is a useful link relating to reportable fringe benefits. 

You can find a handy fact sheet here.

On your payment summary that you will receive from CPL at the end of financial year, you will see a Reportable Fringe Benefits amount that needs to be declared when you lodge your tax return. Whilst you will not be assessed for income tax on the Reportable Fringe Benefits amount, it will be added to your taxable income when the ATO calculates your liability for the Medicare levy surcharge, superannuation co-contribution, eligibility for certain government benefits, education debt repayments and child support agency arrangements.

You aren’t able to claim anything on your tax return that you have already claimed through salary packaging. For example: if you claimed your professional membership fees through RemServ, you can’t also submit this receipt amount in your tax return because you’ve already claimed this benefit.

For more information on this topic please visit the ATO website or talk with your personal Accountant or Financial Advisor.

This question and answer were taken from the Australian Tax Office (ATO) website. https://www.ato.gov.au/General/Fringe-benefits-tax-(fbt)/In-detail/Employees/Reportable-fringe-benefits---facts-for-employees/

Even though a reportable fringe benefits amount is included on your payment summary and is shown on your tax return, you do not:

• include it in your total income or loss amount
• pay income tax or Medicare levy on it.

Your reportable fringe benefits amount is used for:

• calculating your liability to the Medicare levy surcharge
• determining if you can claim a deduction for personal superannuation contributions you made
• determining your eligibility for the government co-contribution for personal superannuation co-contributions you made
• determining your eligibility for family assistance payments (Family Tax Benefit Part A and Part B, Child Care Benefit for approved care, Parental Leave Pay, Dad and Partner Pay and Schoolkids Bonus)
• working out if you are entitled to reduce your employee share scheme discount
• working out the amount you must repay against your Higher Education Loan Program (HELP) or Student Financial Supplement Scheme (SFSS) debt
• determining your entitlement to a tax offset for:
  • contributions you made to your spouse's super
  • invalid and invalid carer
  • zone or overseas forces
  • net medical expenses
  • Medicare levy surcharge (lump sum payment in arrears)
  • seniors and pensioners
• working out your child support obligations
• working out your entitlement to claim low income supplement or low income family supplement
• determining whether you can offset your business loss against other income.

See your personal Accountant or Financial Advisor for more information.
 

If you leave CPL’s employment you will need to cease your packaging. Before you finish up with CPL you could send extra funds to maximise the use of your caps with your final pays, speak with RemServ to organise this. Once your packaging has been ceased with RemServ, if you have any excess unspent funds remaining with them they will be sent back to CPL Payroll to be taxed like your normal pay, then deposited into your back account.

RemServ – call them on 1300 73 66 62 or visit remserv.com.au – RemServ are our salary packaging provider, when you call them mention that you are a CPL employee, as they will need to understand the organisation that you’re from to give you the correct information.

The Australian Tax Office (ATO). The ATO is the governing body for taxation legislation in Australia, start at this website to see information relating to salary packaging https://www.ato.gov.au/general/fringe-benefits-tax-(fbt)/in-detail/employees/salary-sacrifice-arrangements-for-employees/

ASIC’s MoneySmart website explains salary packaging here. There is only a little information that refers to not for profit organisations. https://www.moneysmart.gov.au/managing-your-money/income-tax/salary-packaging