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Salary Packaging Policy

Version 1.0 Updated 17 Oct 2017
Policy Manage

Who can use this policy?

This policy can be used by all employers.

Commentary

This policy has been developed to assist subscribers in defining the arrangements between the employer and employees eligible to participate. Salary sacrificing is generally offered to salaried employees.

The policy you create using Workplace is guidance in relation to recognising the legal process whereby you approve the modification of your employees’ existing cash salary into a combination of both cash and non-cash benefits.  

The Australian Taxation Office (ATO) accepts salary packaging as a bona fide means of remunerating employees only if such arrangements constitute an “effective” Salary Sacrifice Arrangement (SSA). An “effective” SSA involves an employee agreeing to receive part of their total remuneration as benefits before the employee has earned (or derived) the entitlement to receive that amount as salary or wages.

It is recommended that details of the value of the benefit must be set out in writing, and should include gross salary, the amount of salary sacrifice, the after salary sacrifice amount to be taxed, the marginal tax rate, the amount of FBT and after tax salary

In the case of employee contributions to the chosen Superannuation Scheme, the contribution percentage must also be shown. The financial details should be shown on an annualised basis as well as a pay period basis.

Ensure that your employees aware of the policy and the criteria for eligibility.  

Your employees should be advised to obtain independent financial advice prior to commencing salary packaging.

Further information

Neither the content of the policy nor this commentary constitutes legal, financial or taxation advice, and subscribers and their employees should make their own independent enquiries in relation to these matters.

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