In an increasingly complex financial landscape, it’s essential for employees to understand the range of benefits available to them. One such benefit, provided under the Victorian Government Schools Agreement 2022, is salary packaging. This article offers an in-depth look at what salary packaging entails, the variety of benefits it includes, and some crucial considerations for participating employees.
What is Salary Packaging?
Salary packaging, also known as salary sacrificing, is an arrangement where an employee agrees to forego part of their pre-tax salary in exchange for benefits of a similar value. The Victorian Government Schools Agreement 2022 allows employees to enter into a salary packaging arrangement that includes a range of benefits.
Salary Packaged Benefits
The Victorian Government Schools Agreement 2022 specifies the following benefits that can be included in a salary packaging arrangement:
- Superannuation: This benefit allows employees to contribute to their superannuation fund, which can provide significant tax advantages.
- Novated Lease on a Motor Vehicle: This provision allows employees to lease a motor vehicle using their pre-tax salary.
- Payment of Medical Benefits Insurance: Employees can cover their medical insurance premiums through their pre-tax salary.
- Mobile Telephones: The cost of a mobile phone can be included in salary packaging.
- Notebook and Laptop Computers: Employees can cover the cost of personal computing devices.
- Membership Fees and Subscriptions to Professional Associations: This benefit covers the cost of professional association memberships and subscriptions.
- Home Office Expenses: This benefit can cover the costs associated with setting up and maintaining a home office.
- Financial Counselling Fees: Salary packaging can cover the cost of financial counselling.
- Disability/Income Protection Insurance Premiums: Employees can pay their disability or income protection insurance premiums.
- Self-Education Expenses: Employees can cover the costs of furthering their education.
Considerations for Employees
There are a few essential points that employees should be aware of when considering salary packaging:
- Costs and Taxes: All costs associated with salary packaging, including any additional tax associated with the employment benefit, are to be met from the salary of the participating employee.
- Written Permission: Deductions made from an employee’s salary for the purposes of salary packaging are authorised in accordance with the agreement if permitted in writing by the employee.
- Agreement Commencement: Subclause (3) applies to deductions made from an employee’s salary on or after the date this Agreement commences operation, regardless of whether the written permission referred to in that clause is given before or after this Agreement commences operation.
In summary, salary packaging can be an effective way for employees to maximise their income and take advantage of various benefits. However, it’s crucial for employees to understand the implications fully and seek professional advice if needed.