Salary Packaging a Car & Employee Contributions
edit the cells shaded yellow This example illustrates how salary sacrifice arrangements can work. It is not intended to be advice, whether legal or professional. You should not act solely on the basis of the information in this example. Specific advice should always be obtained from your financial adviser. A Step 1 Lease payments Fuel & Oil Repairs & Maintenance Registration (GST Free) Insurance GST Inclusive car exp. Less Input tax credits GST Exclusive car expenses Step 2 Base Value of Car Statutory fraction Gross Tax Payable Less Employee Contribution Taxable Value Gross-Up Rate Grossed-up taxable value FBT Rate FBT Payable Step 3 Employee Contribution GST Rate GST Payable on Employee Contrib Step 4 Actual After tax contribution Salary Sacrifice Amount Calculate the salary sacrifice amount $8,000 $1,100 $1,000 $600 $800 $10,900 $991 $10,509 FBT Payable on Car Benefit No Contributions Contributions $35,000 $35,000 11% 11% $3,850 $3,850 $0 $3,850 $3,850 $0 2.0647 2.0647 $7,949 $0 46.5% 46.5% $3,696 $0 GST on Employee Contributions $0 10% $0 Employee Contribution $0 $14,205 $3,850 $7,009
$3,850 10% $350
Generally, a car should only be packaged if the following conditions are met: 1. The car travels at least 15,000km (i.e. the 26% statutory fraction doea not apply during the FBT year; 2. The car is financed by an operating or a novated lease arrangement; 3. The base value of the car does not exceed $55,000; and 4. The FBT applicable to the car benefit is calculated under the Statutory formula method.
Total kilometres travelled during the year Less than 15,000 15,000 to 24,999
Statutory percentage 26% 20%
25,000 to 40,000 Over 40,000 *Tax rates 2007-08 Taxable income
11% 7%
Tax on this income
$1 – $6,000 $6,001 – $30,000 $30,001 – $75,000
Nil 15c for each $1 over $6,000 $3,600 plus 30c for each $1 over $30,000 $17,100 plus 40c for each $1 over $75,000 $47,100 plus 45c for each $1 over $150,000
$75,001 – $150,000 $150,001 and over
Comparison of Packaging with & without employee contributions
*income tax rates for 07/08
No Packaging by the employee Remuneration Package Less Tax on Remuneration Medicare Levy Income after tax & Medicate Levy Less Car Operating Expenses Net disposable income $14,100 $975 $49,925 $11,500 $38,425 $65,000
Salary Packaging by the employee with no contributions
Remuneration Package Less Salary sacrifice amount Salary after sacrifice
$65,000 $14,205 $50,795
Tax on Salary after sacrifice Medicare Levy Income after tax & Medicare levy
$9,838 $762 $40,194
Salary Packaging by the employee with contributions
Remuneration Package Less Salary sacrifice amount Salary after sacrifice Tax on Salary after sacrifice Medicare Levy Income after tax & Medicare levy Less Employee contribution Net disposable income $11,997 $870
$65,000 $7,009 $57,991
$45,124 $3,850 $41,274
Increase in Net disposable income by salary $1,079
PAYG Calculator
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Income is But Less Than Greater Than or or Equal To… Equal To… $0 $6,001 $30,001 $75,001 $150,001 $6,000 $30,000 $75,000 $150,000
Base amount
Tax Rate
$3,600 $17,100 $47,100
0.00% 15.00% 30.00% 40.00% 47.00%
Calculator
Annual
Fortnightly
Weekly
Enter Income Here Tax Amount Your Marginal Tax Rate is: ML 1.5% Total Tax
$ 60,000.00 $ 12,600.00 30% 900.00
$ 2,307.69 $ 484.62
$ 1,153.85 $ 242.31
$
$ 13,500.00
$
519.23
$
259.62
Super Salary Sacrifice Calculator
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Gross Salary
$75,000
Annual Salary and tax details Gross Salary
Salary Sacrifice (%) OR
0% Salary Sacrifice contributions Taxable income
Salary Sacrifice ($)
$200.00 Per
Week PAYG Tax After tax contributions
This example illustrates how salary sacrifice arrangements can work. It is not intended to be advice, whether legal or professional. You should not act solely on the basis of the information in this example. Specific advice should always be obtained from your financial adviser.
Take home pay Super Contributions Employer SG Contributions Salary Sacrifice contributions Contributions Tax After tax contributions Net Super Contributions
e Calculator
After Tax contribution $75,000 0 $75,000 $17,100 $10,400 $47,500
Salary sacrifice contribution $75,000 $10,400.00 $64,600 $13,980 0 $50,620 Difference $3,120
$6,750 $0 $1,012.50 $10,400 $16,137.50
$6,750 $10,400 $2,572.50 $0 $14,577.50 Difference $1,560.00