CEO Message: Transcript
Hi everyone. It’s Rhys here.
I just wanted to share with you a change we’ll be making to the way in which we deliver salary packaging here to you at CPL.
As you probably know, salary packaging enables you to pay less tax by having a range of expenses – like your rent, your mortgage, or other bills – deducted from your pay before tax is calculated.
For a number of years, the tax savings achieved through salary packaging were shared between you and CPL.
This was a common approach adopted by many not-for-profits in the past. However, more recently, this has become less common.
Today, I wanted to let you know that in January, we will be removing the tax sharing arrangement.
Once this happens, employees will get the full benefit of salary packaging.
Removing the tax share has been a personal priority of mine since becoming the CEO and I’m really excited to be able to deliver on this commitment to you.
The eligibility criteria to access salary packaging remains unchanged, including being a full-time or permanent part-time employee.
If you are currently a casual employee and you’re working regular, predictable hours and shift, and you wish to access salary packaging, now might be a good time to have a conversation with your supervisor or manager about transitioning to permanent part-time employment.
If you don’t currently participate in salary packaging and you’d like to take advantage of the full benefit, please contact Remserv.
Their phone number is 1300 303 940 and website is www.remserv.com.au
There is also plenty of information about salary packaging on our intranet; and there is some more information below for handy reference.
Thanks everyone. Take care and stay safe.
About salary packaging at CPL
At CPL we care for your financial well-being, which is why we are pleased to offer eligible employees (permanent employees) the option to participate in a workplace benefits program called Salary Packaging. Salary Packaging allows eligible employees the option to package up to a cap of $15,900* per annum, or $611.54* per fortnight, of their salary which is tax free, providing the employee with a potential tax saving. Salary Packaging benefits within this cap can include mortgage and/or rent payments, living expenses, motor vehicle expenses, child care fees, credit card payments and many more. View our Frequently Asked Questions at the bottom of this page for more information about what you can package.
Where an employee is required to package a vehicle, as a mandatory part of their role, your total package cap will be reduced by the taxable value of your vehicle based on the FBT statutory formula method.
In addition to the items and amounts included in the cap above, you can package payments towards a Meal and Entertainment payment card, portable electronic devices, self-education expenses, venue hire and many more.
We have partnered with RemServ, part of Australia’s largest salary packaging group, to manage your salary packaging arrangements. Please refer to RemServ and CPL’s Salary Packaging Policy for all terms and conditions. For further information on how you can maximise salary packaging as a benefit to you, RemServ can be contacted on 1300 73 66 62 or visit www.remserv.com.au.
*These values may change subject to legislative changes. Based on your commencement date this value could potentially change if you choose to accelerate your packaging. Speak with RemServ to discuss this option.
Frequently Asked Questions - Salary Packaging
What is salary packaging?
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.
Why should I participate in 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.
What types of things can I salary package?
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.
How much am I able to salary package?
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.
What happens if I exceed my Fringe Benefits Tax (FBT) cap?
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.
What will my salary look like with salary packaging? How much can I save?
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
How does it work at CPL? How do I organise my salary packaging?
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.
What happens when I reach my FBT cap limits?
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.
How do I make changes to my salary packaging?
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.
Why am I able to do this? It sounds too good to be true?
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.
When does the Fringe Benefits Tax (FBT) year start and end? And why do I need to know?
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.
What happens if I haven’t used all of my caps by the end of 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!
What does salary packaging mean for my HELP or education debt?
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
What does grossed up taxable value or GUTV mean?
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.
What happens at end of financial year, or when I complete my tax return?
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.
What are the consequences of having fringe benefits reported on your payment summary?
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.
What happens to my salary packaging if I leave CPL?
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.
Where can I learn more about salary packaging?
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