The social implications of salary packaging cards
2 June 2021 at 7:00 am
Not for profits with a charitable intention have tight operational budgets. However, thanks to salary packaging concessions, they can offer competitive remuneration to the private sector.
Not only does salary packaging help top-up the take-home pay of not-for-profit employees through taxation breaks, it effectively ensures better attraction and retention of talent across the industry.
It means that people passionate about working in the sector can afford to stay there. Ultimately better care, services and products are on the table. And that’s a win for everyone.
Salary packaging allows employees to receive less income after-tax in return for their employer paying for benefits out of their pre-tax salary.
| Without salary packaging | With salary packaging* | |
| Gross salary | $80,000 | $80,000 |
| Salary packaging (living expense) card | $15,900 | |
| Meal entertainment card | $2,650 | |
| Taxable income | $80,000 | $61,450 |
| PAYG Tax and Medicare Levy | $18,067 | $11,667 |
| Net pay including salary packaging | $61,933 | $68,333 |
| Estimated tax saving – annual | $6,400 |
* Public Benevolent Institutions with FBT exemption
When other financial institutions were walking away from salary packaging cards in 2015 because of low profit margins, Beyond Bank recognised the important role they have to play when it comes to social service and community contribution.
We now offer salary packaging cards to almost 1,100 organisations across Australia.
Our salary packaging cards remain one of the easiest and most effective ways salary packaging employees can save on tax. They don’t have to wait for reimbursements or collate and retain receipts. They can spend their tax-free funds when and how they want, without worrying about the paper trail.
Beyond Bank’s salary packaging manager, Hitesh Bhanderi, says that there are varying levels of uptake of salary packaging across eligible employers.
“It can be as low as 60 per cent in some cases,” he says.
“Sometimes it’s low because people think that it won’t help them to reduce their taxable income.
“But really, it comes down to how well employers and providers educate their people. Those that do it well usually have a much higher participation rate.”
Of course, if you’re considering salary packaging it’s important you consider your options and seek independent advice. You can also check the implications of salary sacrifice arrangements for employees on the Australian Taxation Office website before deciding if it is right.
Plus, we’re serious about developing mutually beneficial partnerships, just like we are committed to supporting our communities. Often salary packaging with a not for profit is just the start of a fulfilling long-term relationship. What started as salary-packaging for many of these organisations evolved into a whole lot more.
We know that if we can help a not for profit flourish, it is better for the community. In some instances, we might support them further through sponsorships, grants and fundraising goals and assist them with their volunteering needs, employee benefits like financial wellbeing support, and of course award-winning banking products and services.
Want to know more about salary packaging for your organisation? We’d love to talk to you. Find out more or book in a catch up with a salary packaging specialist.
