When is salary packaging a car worth it

Coco Hou. June 4, 3 mins read. Recommended by IR Strategy. Author's latest articles Tax. Tim Ladhams. Craig West. The amount of the contribution will not be liable to fringe benefits tax and the contributions will not be included as a reportable fringe benefit amount on the employee's payment summary.

Salary sacrificed contributions are treated as employer contributions. As superannuation contributions are not subject to FBT and are not reportable benefits, they are attractive to salary package.

The employee on higher marginal tax rates will have higher savings. Salary sacrificed contributions to a super fund form part of the 'concessional contributions' in the fund. However, there is a cap on the amount of concessional contributions that each member can enjoy each income year.

If a person has contributions made to more than one superannuation fund, all contributions are aggregated. If the concessional contributions cap is exceeded any excess concessional contributions are included in the assessable income for the corresponding year and taxed at the person's marginal tax rate. They are also liable to pay the excess concessional contributions ECC charge.

If the concessional contributions cap is exceeded and the calculated tax liability for the year includes the excess. Any excess concessional contributions withdrawn from the fund also no longer count towards the persons non-concessional contributions cap.

Looking for advice on salary sacrificing? We can help you out. At Killara Wealth we price advice according to complexity and the time we expect it to take to prepare and implement the advice for you. As part of any financial advice process, an essential ingredient is understanding your investor profile.

This is usually ascertained from completing a risk profile questionnaire to assist your understanding of Salary Packaging and Novated Leasing A novated lease means your employer pays for your car under a lease and all the operating costs such as insurance, registration, fuel and maintenance. The Benefits of Novated Leasing The benefits of a novated lease lie in the tax savings they can provide. Some of the benefits novated lease and salary packaging companies use when promoting their services include: You will save on the purchase cost of the vehicle because there is no GST on the purchase price.

However, if you have a partner with their own business and ABN consider options available to them. You will save additionally on the purchase price of a vehicle due to purchasing power of the salary packaging or lease company. This in turn lowers your taxable income meaning you pay less tax. Novated lease vehicles are one of the most popular salary packaging items we manage. But laptops, personal electronic devices and other employment related expenses can also be packaged.

With a LeasePlan novated vehicle lease, your package includes everything your car will need. This means that costs such as maintenance and repairs, tyres, registration and fuel, are bundled in to one monthly payment.