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Transcript

Nice (salary) package · She's On The Money

0:00
Speaker 1: She's on the Money. She's on the Money.
0:17
Speaker 2: Hello and welcome to She's on the Money, the podcast
0:20
Speaker 2: and millennials who want financial freedom. Paying tax, as Victoria
0:24
Speaker 2: define often says, is a privilege here in Australia. But
0:29
Speaker 2: despite its importance and its necessity, I think we'd all
0:32
Speaker 2: probably be lying if we said it we didn't grown
0:35
Speaker 2: a little bit each week when the tax man does
0:37
Speaker 2: dip his little fingers into our hard earned cash and
0:40
Speaker 2: take a good portion away, am I right?
0:42
Speaker 3: Feet? All right, well that's not exactly how it works,
0:44
Speaker 3: but yes, carry on.
0:46
Speaker 2: But what if there was a legal, ridgi ditch way
0:49
Speaker 2: of decreasing the amount of tax we pay by packaging
0:52
Speaker 2: our salaries?
0:53
Speaker 3: That is a ridgidtchway of decreasing the amount of tax
0:56
Speaker 3: you pay.
0:56
Speaker 2: And it's a real thing, So it's called salary packaging.
0:59
Speaker 2: Makes sense and joining me to get to the bottom
1:01
Speaker 2: of it all is financial advisor Victoria Divine Victoria. Let's
1:05
Speaker 2: dive in head first. Salary packaging is a very hot
1:08
Speaker 2: topic in our community and I do have a lot
1:11
Speaker 2: of questions to get to today. But to start us off,
1:13
Speaker 2: what actually is it?
1:15
Speaker 3: I like this topic because it has been requested so
1:18
Speaker 3: many times the community literally goes wild for salary packaging
1:22
Speaker 3: questions and what they can and can't package. But also
1:25
Speaker 3: I think it's important to point out that if this
1:27
Speaker 3: isn't available to you, that's okay. Like often this is
1:30
Speaker 3: only available to government workers and healthcare workers and certain professions.
1:34
Speaker 3: So if it's available to you, well done. In this
1:36
Speaker 3: episode is for you, if not interesting to know about.
1:40
Speaker 3: But also it definitely isn't something that every single employer does.
1:44
Speaker 3: But if you don't have salary packaging and you would
1:46
Speaker 3: love to have it, every employer in Australia is gonna
1:49
Speaker 3: hate me. Now have a chat to your employer and
1:51
Speaker 3: just see if they can do anything about it. If
1:54
Speaker 3: that is something that is of value to you. So
1:57
Speaker 3: to jump straight in, which I think is the only
1:59
Speaker 3: way to jump in, you can't dive backwards. But salary
2:03
Speaker 3: packaging is often known as salary sacrificing and it's basically
2:07
Speaker 3: a way of paying less tax by receiving a portion
2:09
Speaker 3: of your pre tax income in the form of different
2:12
Speaker 3: benefits like devices or cars or superannuation contributions. As we
2:17
Speaker 3: know in Australia, the lower your income, the less tax
2:20
Speaker 3: you pay, which is a bit of a money win,
2:22
Speaker 3: but kind of in a backwards way. And salary packaging
2:25
Speaker 3: is a way of legally paying less tax while still
2:29
Speaker 3: being on the same salary as you were before. But
2:31
Speaker 3: instead of only income, you've lowered your income plus benefits,
2:34
Speaker 3: which is kind of cool. The typical way that we
2:37
Speaker 3: think about our expenses would be to pay for them
2:39
Speaker 3: once we receive our income into our bank accounts and
2:42
Speaker 3: once tax has been removed from that income. But salary
2:45
Speaker 3: packaging actually means that you can cover some of your
2:48
Speaker 3: expenses like your more Google, your rent, or a new
2:51
Speaker 3: car if you listen to that episode a couple of
2:53
Speaker 3: weeks ago by using your pre tax income, which may
2:57
Speaker 3: leave you with more disposable income each week to work with,
2:59
Speaker 3: which it kind of sounds like a dream.
3:01
Speaker 2: It does sound like a dream. So how does this
3:03
Speaker 2: actually work with your employer? Do you just sit down
3:07
Speaker 2: and have the chat with them? Or is it only
3:09
Speaker 2: some workplaces off books?
3:10
Speaker 3: Mate, I want salary packaging and they can get it. No,
3:14
Speaker 3: that's absolutely not how it happens. Most larger workplaces will
3:17
Speaker 3: work with you to establish a salary packaging plan as
3:20
Speaker 3: long as it works for both parties and you can
3:23
Speaker 3: easily check with your employer by having a conversation with
3:25
Speaker 3: your HR department, but smaller businesses might not offer this,
3:29
Speaker 3: so honestly, it's best case scenario like check see if
3:32
Speaker 3: they do. But it is a bit of a hussle
3:34
Speaker 3: and it can be a bit of a muck around
3:36
Speaker 3: for smaller businesses, So please don't slave if your employer
3:39
Speaker 3: if they don't offer it, and I feel like it's
3:41
Speaker 3: completely reasonable to not if it is fantastic. It's a
3:44
Speaker 3: benefit of your employment. So all businesses are different and
3:48
Speaker 3: some may only offer some benefits. So some might say, yep, cool,
3:51
Speaker 3: you can make additional super contributions, but you're not allowed
3:55
Speaker 3: to salary package a car or your phone or your
3:56
Speaker 3: laptop or whatever. And at the end of the day,
3:59
Speaker 3: it's actually an arrangement agreed upon by you and your
4:01
Speaker 3: employee generally before you start working, so it's not usually
4:05
Speaker 3: set out halfway through your employment. But you know, we
4:08
Speaker 3: can always renegotiate. We've listened to the Renegotiate your Salary
4:12
Speaker 3: podcasts before, and if you haven't, go back and listened
4:14
Speaker 3: to them. But once it's established, a set amount of
4:17
Speaker 3: your pre tax salary will be taken and then allocated
4:20
Speaker 3: to your chosen benefit for the course of whatever time
4:23
Speaker 3: period that you've both agreed to. Now, you don't necessarily
4:26
Speaker 3: have to do it before starting a new workplace. It's
4:28
Speaker 3: just best practice. But once you've established that package and
4:31
Speaker 3: what it can look like, the benefits will come from
4:34
Speaker 3: all future work rather than you're getting to claim and
4:36
Speaker 3: a crude leave payment, etc.
4:38
Speaker 2: Yeah. So that's if you've already started working at a
4:40
Speaker 2: place and you're like, Oh, salary packaging sounds nifty. I've
4:43
Speaker 2: got four weeks leave. I want to turn that into
4:45
Speaker 2: a car. That's not a vibe.
4:46
Speaker 3: That's not a vibe, that's not a thing that's entitlement starting. Okay,
4:50
Speaker 3: different story.
4:51
Speaker 2: So is this a thing that is accessible only for
4:54
Speaker 2: full timers or can part timers and casuals get involved?
4:57
Speaker 3: So, part timers can and casuals can certain circumstances, but
5:01
Speaker 3: they're honestly the best way to work out whether this
5:04
Speaker 3: is applicable to you.
5:05
Speaker 4: So talk to your employer or your HR department. Yeah,
5:08
Speaker 4: because it's going to be different for everyone, Absolutely it is.
5:10
Speaker 4: So you mentioned cars and devices before, What exactly can
5:15
Speaker 4: we ask for them?
5:16
Speaker 2: What can we package? Oh?
5:17
Speaker 3: My gosh, there are so many things you can package.
5:19
Speaker 3: You can literally package so much stuff. One super great,
5:23
Speaker 3: we're investing for our future too, aged care and disability
5:26
Speaker 3: costs for loved ones, so obviously not for you because
5:29
Speaker 3: you're currently working, car parking, childcare, clothing. You can get
5:34
Speaker 3: your income protection insurance, my friends. You can get financial advice,
5:39
Speaker 3: wild groceries, health insurance, premiums. You can organize holiday accommodation,
5:44
Speaker 3: and then you hire laptops, rates, rents, mortgage like literally
5:48
Speaker 3: your utilities bills. There are so many things you can
5:51
Speaker 3: salary package. But again I've just listed off this very
5:55
Speaker 3: attractive list. They're not all available to everybody. It's just
5:59
Speaker 3: different industries and sectors.
6:01
Speaker 2: Speaking of different industries and sectors, I read that the
6:05
Speaker 2: healthcare sector, maybe government sectors get a better deal. Here,
6:10
Speaker 2: can you flesh that out for me?
6:11
Speaker 3: We do get a pretty good deal. Workers in nonprofits
6:15
Speaker 3: slash charity and people who work in the public health system,
6:18
Speaker 3: they typically receive the best salary packaging benefits available, which
6:21
Speaker 3: is very nice, and they actually include things like paying
6:25
Speaker 3: your rent and packaging your rent and credit card expenses
6:28
Speaker 3: and mortgages and more. And the reason that that is
6:31
Speaker 3: actually available. Apart from being like a really nifty thing
6:34
Speaker 3: to do, is obviously that the government wants to make
6:37
Speaker 3: it really attractive to work in these spaces, so they
6:40
Speaker 3: give a whole heap of other benefits, which at the
6:43
Speaker 3: end of the day does make it even more attractive
6:45
Speaker 3: to work there.
6:46
Speaker 2: Absolutely. So in your line of biz, Vickid, do many
6:50
Speaker 2: of your clients opt for salary packaging?
6:53
Speaker 3: Com of them do. Yeah, It's actually very common, depends
6:57
Speaker 3: on what it is. So I've got a lot of
6:59
Speaker 3: clients who do work in healthcare. I've got doctors and nurses,
7:02
Speaker 3: or a few doctors and nurses, and some of them
7:05
Speaker 3: salary package. I've got some people who salary package their rent,
7:09
Speaker 3: some people whose salary package just like a food and
7:12
Speaker 3: beverage card. But there's certain rules and regulations, so I
7:15
Speaker 3: know that a couple of them can't get groceries, but
7:18
Speaker 3: they can go dine out at a restaurant. So it's
7:20
Speaker 3: going to be completely dependent on your rules and regulations
7:23
Speaker 3: for your industry and your salary packaging program. So I
7:27
Speaker 3: do apologize that I can't give you specifics. I wish
7:30
Speaker 3: I could, but alas I cannot. That's why this is
7:33
Speaker 3: a general advice podcast, Georgia. But also it's going to
7:37
Speaker 3: be just dependent on your employer as to what you
7:40
Speaker 3: can access or not. But the best thing is to
7:42
Speaker 3: literally just ask them and see how much advantage you
7:46
Speaker 3: can take of it. Essentially, like IRF, it is available
7:48
Speaker 3: to you and you can salary sacrifice your rent and
7:51
Speaker 3: you're not. My question is why on earth are you not?
7:53
Speaker 2: Yeah, because that kind of makes a lot of sense. Definitely,
7:57
Speaker 2: if you're paying rent anyway.
7:59
Speaker 3: I would actually prefer this and just say, hey, cool,
8:02
Speaker 3: I get that it sounds really attractive and rah rah,
8:05
Speaker 3: but I would only be salary sacrificing sure thing costs,
8:09
Speaker 3: so like rent and you know, food and beverage costs,
8:13
Speaker 3: because I have seen a couple of people go, oh, like,
8:15
Speaker 3: I put heaps on a food and beverage card and
8:17
Speaker 3: now I spend more going out for dinner because they
8:20
Speaker 3: can only spend it. Yeah, And therefore it's actually not
8:23
Speaker 3: a good financial decision for them, But it sounded like
8:26
Speaker 3: a good idea at the time because obviously it's a
8:28
Speaker 3: tax effective and they feel like because at the end
8:31
Speaker 3: of the day, if I gave you like a card
8:32
Speaker 3: George and said, hey, each each week there's two hundred
8:35
Speaker 3: bucks on here and you have to spend it out,
8:37
Speaker 3: you'd feel like it's free money as opposed to you
8:40
Speaker 3: definitely come. And I think the mentality around that just
8:43
Speaker 3: needs to settle a little bit, because we need to
8:45
Speaker 3: be making the right financial decisions for us, not just going,
8:48
Speaker 3: oh my gosh, I can salary package and get thirty
8:50
Speaker 3: percent off of all whatever.
8:51
Speaker 2: Yeah.
8:52
Speaker 3: Yeah, and I think that, yeah, it's not always the
8:55
Speaker 3: best financial decision. But if you're salary packaging, sure thing costs,
8:58
Speaker 3: like you're actually paying your mortgage or your rent, or
9:01
Speaker 3: your bills or things that actually have to happen. Great.
9:04
Speaker 3: I also see people slip down a little bit of
9:06
Speaker 3: a slippery slope when they're like, oh, salary package a
9:08
Speaker 3: brand new car, and then they get a more expensive
9:10
Speaker 3: car because they feel like they're getting more value. And
9:13
Speaker 3: that's also a slippery slope that I don't want you
9:15
Speaker 3: guys to slide down.
9:16
Speaker 2: Yes, okay, no sliding down there. But as I mentioned
9:20
Speaker 2: at the top, you often say that paying tax is
9:25
Speaker 2: a privilege and the more tax we pay it's kind
9:28
Speaker 2: of a good thing. Can you explain that logic again
9:32
Speaker 2: for anyone who's new to the show.
9:33
Speaker 3: And honestly, it just makes us feel good.
9:36
Speaker 2: Yeah.
9:37
Speaker 3: Look, it's probably not the most common mindset that exists,
9:41
Speaker 3: but at the end of the day, it is the baseline,
9:44
Speaker 3: and it is not something that was surprised to you.
9:47
Speaker 3: You didn't go and get a job and then find
9:49
Speaker 3: out later that you had to pay tax. This has
9:51
Speaker 3: always been the standard, and I think that we need
9:53
Speaker 3: to start seeing our take home pay as our take
9:56
Speaker 3: home pay and instead of going, oh, well, I earn
9:59
Speaker 3: sixty five thousand dollars, it's like, well, I get that
10:01
Speaker 3: you earn that, but that is not how much you
10:03
Speaker 3: take home. And I think we really need to reset
10:05
Speaker 3: this frame of mind that that's what you were owed,
10:08
Speaker 3: because it feels a little bit entitled. And I know
10:10
Speaker 3: that I'm probably being quite opinionated and potentially rubbing people
10:13
Speaker 3: the wrong way, but I feel incredibly lucky to live
10:17
Speaker 3: in Australia, like we have so many privileges that are
10:20
Speaker 3: afforded to not many people across the rest of the world.
10:22
Speaker 3: We live in this beautiful country. We have beautiful services
10:26
Speaker 3: and incredible health care that we have access to for free.
10:29
Speaker 3: We have roads that are safe to drive on, we
10:32
Speaker 3: have police, they'll look after us. Like, I know that
10:35
Speaker 3: a lot of people are going to be like, oh, tax,
10:37
Speaker 3: like it's stooged. Yeah, Like I get that frame of mind,
10:40
Speaker 3: but at the end of the day, tax isn't going anywhere.
10:43
Speaker 3: And I think what we need to do is shift
10:45
Speaker 3: our mindsets to one of being grateful rather than being
10:49
Speaker 3: expectant that you know, people owe you something like we
10:53
Speaker 3: are so lucky to live in this country and to
10:55
Speaker 3: have such a beautiful lifestyle. And at the same time,
10:59
Speaker 3: a lot of us might have experienced poverty or disadvantage
11:03
Speaker 3: or you know, so much growing up, but not ever
11:06
Speaker 3: in comparison to what happens overseas, like there is no
11:10
Speaker 3: support system in a lot of other countries. And I
11:12
Speaker 3: think that, you know, I just feel very lucky to
11:15
Speaker 3: be paying taxes. And the more tax you pay, back
11:18
Speaker 3: to your question, Georgia, just means the more you're earning.
11:21
Speaker 3: Now that's something you should be grateful for too, Like
11:23
Speaker 3: the higher your taxable income, the better your lifestyle arguably,
11:28
Speaker 3: and the more money that's actually coming into your back pocket.
11:31
Speaker 3: And I think that the tax system tries to be
11:33
Speaker 3: really fair, and I know that there are a lot
11:35
Speaker 3: of things that a lot of people don't agree with.
11:37
Speaker 3: And please don't get me wrong, there are a lot
11:38
Speaker 3: of things that I don't love about it. But I
11:41
Speaker 3: do think that we, you know, live in a country
11:44
Speaker 3: where we just need to be really grateful for it.
11:46
Speaker 3: And I think that if we can shift our mindset,
11:48
Speaker 3: it actually helps us better than anybody else. Like we're
11:52
Speaker 3: not here going, oh my gosh, at O, I'm so grateful,
11:55
Speaker 3: Like no one's going to say that, but I just
11:57
Speaker 3: feel very lucky to be in a situation where I
12:00
Speaker 3: do earn money and I can give back to my
12:02
Speaker 3: community and my society.
12:03
Speaker 2: Yeah, that's it, isn't We're just lucky, do you?
12:05
Speaker 1: Yeah?
12:06
Speaker 2: No, that's a very good reminder. Now we will be
12:09
Speaker 2: back after a very short break to chat super fringe
12:12
Speaker 2: benefit tax and also the potential pitfalls of salary packaging,
12:16
Speaker 2: my friends, So please don't go anywhere so much to
12:29
Speaker 2: hello again, friends, We are back.
12:30
Speaker 3: Surprise, it's us, surprise.
12:33
Speaker 2: If you guys are loving the podcast today.
12:36
Speaker 3: Which obviously you should be obviously.
12:38
Speaker 2: Very welcome, don't forget that the podcast isn't the only
12:42
Speaker 2: place you can find us. We're also on Instagram, Facebook, YouTube,
12:46
Speaker 2: tiktop got a newsletter. How many people are in the
12:49
Speaker 2: Facebook group now?
12:50
Speaker 3: One hundred and fifty thousand people?
12:52
Speaker 2: Yeah, out of town.
12:53
Speaker 3: It's insane.
12:54
Speaker 2: Hey, Lucky, I feel like it was like two months
12:56
Speaker 2: ago that you did that little photo shoot with one hundred.
12:59
Speaker 3: Useless, fruitless photo shoot. Yeah, because it didn't get to
13:02
Speaker 3: reducta like redundant put it in the bin.
13:05
Speaker 2: Was cute though, it was cute. So join us there, guys,
13:09
Speaker 2: if you're not, they're all ready. But moving back into
13:12
Speaker 2: the show the chattin salary packaging today, So superinuation at
13:18
Speaker 2: its importance is something we do talk about a lot
13:21
Speaker 2: at cheese on the money because we are all about
13:23
Speaker 2: putting future you first tweet, So how can we use
13:27
Speaker 2: salary packaging to our benefit in that sense?
13:30
Speaker 3: All right, So salary sacrificing into super it's a mouthful,
13:35
Speaker 3: just get out.
13:35
Speaker 2: But it is.
13:36
Speaker 3: Definitely something to consider if you are trying to reduce
13:39
Speaker 3: your taxable income at the same time as trying to
13:41
Speaker 3: increase your retirement income. Genius, right, but also obviously only
13:46
Speaker 3: if this works for you personally. An example of how
13:49
Speaker 3: this works would be let's just say, for example, you
13:51
Speaker 3: earn seventy thousand dollars per year before tax. You could
13:55
Speaker 3: opt to put ten thousand dollars of that into SUPER
13:58
Speaker 3: and you'll then only pay income tax on sixty thousand
14:02
Speaker 3: dollars huge, which means your income would be reduced to
14:05
Speaker 3: sixty thousand dollars. But the benefit is you're paying less
14:09
Speaker 3: tax than your Super contributions are still taxed at fifteen
14:11
Speaker 3: percent instead of thirty two point five percent, which the
14:14
Speaker 3: average income earner would be paying anyway, which I think
14:18
Speaker 3: is hardly attractive. So to preface that, any contribution you
14:22
Speaker 3: make to superanuation up to that twenty five thousand dollars
14:25
Speaker 3: supernuation cap is going to be taxed at fifteen percent,
14:28
Speaker 3: so you can actually claim that later. So say you
14:31
Speaker 3: got that, And this is just me going on a
14:33
Speaker 3: sidetrack just to make sure that there's no confusion. So
14:36
Speaker 3: say you got extra money in your account and you're like, oh,
14:40
Speaker 3: actually I wish i'd put that into Super. You can.
14:43
Speaker 3: You can just transfer it over and a couple of
14:45
Speaker 3: weeks ago, and this isn't sponsored. Again, we're talking about
14:48
Speaker 3: bpay and being able to be pay additional super contributions
14:51
Speaker 3: into your superannuation fund which is kind of handy, but
14:55
Speaker 3: you can then claim it at tax time and get
14:57
Speaker 3: that difference between that fifteen percent and that thirty two
14:59
Speaker 3: points five percent back. Oh, so that's what happens at
15:03
Speaker 3: tax time, so that you end up in a good
15:05
Speaker 3: financial position, which is a bit of a money win.
15:07
Speaker 2: I think, huge money win. What's the twenty five thousand
15:10
Speaker 2: dollar cap? Is that per year?
15:12
Speaker 3: So that per year? Look, I will go into it
15:14
Speaker 3: in more detail on more super specific episodes, which I
15:17
Speaker 3: know you guys have been asking for, so let's get
15:20
Speaker 3: to them at some point. But essentially, you can contribute
15:22
Speaker 3: up to twenty five thousand dollars per year and make
15:25
Speaker 3: use of that fifteen percent tax guarantee. Do you do that?
15:29
Speaker 3: I don't do that.
15:30
Speaker 2: Why don't you contribute that twenty five k to Superman.
15:33
Speaker 3: Because I'm poor? No, that's absolutely not the answer. So
15:36
Speaker 3: the reason I don't is because, one don't. I just
15:39
Speaker 3: don't have that free cash flow at this point in
15:42
Speaker 3: my life. Yeah, I wish I did, but also at
15:45
Speaker 3: the moment, my focus is on creating an investment portfolio
15:48
Speaker 3: outside superannuation because I want to retire before sixty five.
15:52
Speaker 3: So as much as we talk about Super being really
15:54
Speaker 3: really great and it is honestly the closest thing that
15:57
Speaker 3: we have in Australia to a tax haven, which is
15:59
Speaker 3: a money win, and it is really great. I don't
16:02
Speaker 3: want to put my money in there, ye, because I
16:04
Speaker 3: can't access it until I'm sixty five. So I'm definitely
16:08
Speaker 3: contributing to Super, but at the rate that my income
16:11
Speaker 3: is at, which is relatively low at this point in time.
16:13
Speaker 3: If I'm brutally honest, because I keep putting all my
16:15
Speaker 3: money back into shees On Money to watch it grow. Yeah,
16:18
Speaker 3: but I think it's really important to note that I
16:20
Speaker 3: don't do that. But that's a personal choice and I'm
16:23
Speaker 3: happy to share that purely because I want you guys
16:25
Speaker 3: to know that even though these super attractive benefits exist,
16:29
Speaker 3: not everyone is making use of them for whatever reason
16:32
Speaker 3: that makes the most sense to them.
16:34
Speaker 2: Gotcha, that makes sense.
16:35
Speaker 3: But if you want to be contributing more to Super,
16:38
Speaker 3: and you see that as a really great way, like
16:40
Speaker 3: salary sacrificing is a fantastic way to make use of that,
16:43
Speaker 3: it is definitely something I want you to know. I
16:44
Speaker 3: want you to know you have access to so that
16:47
Speaker 3: if it does work for you, you can use it,
16:49
Speaker 3: because I would hate to think that you get to,
16:51
Speaker 3: you know, twenty or thirty years down the track and
16:53
Speaker 3: you be like, oh my gosh, I didn't even know
16:54
Speaker 3: I could do that. I wish I could have done that,
16:57
Speaker 3: and then I would be silly for not having shared
16:59
Speaker 3: it with you. Exactly now.
17:02
Speaker 2: Fringe Benefit tax b is something that bt BT. It
17:05
Speaker 2: came up a lot on my Google searches, as.
17:08
Speaker 3: Is it because you were googling fringe benefit tax.
17:10
Speaker 2: I was googling salary packaging right quite a few times.
17:14
Speaker 2: So what what is FBT? So?
17:17
Speaker 3: Fringe benefit tax is paid by employers on some benefits
17:21
Speaker 3: that they provide to their employees, so it's completely separate
17:25
Speaker 3: from your personal income tax, and the amount the employer
17:28
Speaker 3: will need to pay is calculated on the taxable value
17:31
Speaker 3: of the fringe benefit, So they need to pay a
17:34
Speaker 3: tax on the benefit that you get, which is why
17:36
Speaker 3: a lot of employeers are like, oh, I don't really
17:38
Speaker 3: know if I gotcha. I'm that keen on this benefit
17:41
Speaker 3: because it doesn't benefit me as well as you. But
17:44
Speaker 3: businesses who are providing fringe benefits can usually claim an
17:48
Speaker 3: income tax deduction on the cost and their FBT that
17:51
Speaker 3: they pay, so usually they can also claim GST credits too,
17:54
Speaker 3: so I'm not saying it doesn't equal out in the end,
17:56
Speaker 3: but there's just more drama associated with it in a way. Okay, Now,
18:01
Speaker 3: according to the atiers website, which I just had to
18:03
Speaker 3: look up because obviously I don't know what FET is
18:05
Speaker 3: off the top of my head, but like, let's get
18:07
Speaker 3: super specific, but examples of fringe benefits include allowing an
18:11
Speaker 3: employee to use a work car for private purposes, giving
18:15
Speaker 3: an employee a discounted loan, paying an employees gym membership,
18:19
Speaker 3: providing entertainment by way of free tickets to concerts or
18:22
Speaker 3: music festivals, et cetera, which would be nice, Sorry, Gar,
18:25
Speaker 3: haven't haven't hit that up for you, or reimbursing expenses
18:29
Speaker 3: incurred by employees, such as school fees, or giving benefits
18:33
Speaker 3: under a salary sacrifice arrangement with an employee. So that
18:35
Speaker 3: would just cover everything else.
18:37
Speaker 2: Yeah.
18:37
Speaker 3: The following things which are not fringe benefits though, are
18:41
Speaker 3: salaries and wages, share purchases under approved employee share acquisition schemes,
18:47
Speaker 3: employee contributions to complying super funds, employment termination payments, payments
18:52
Speaker 3: for the amount deemed to be dividends under div seven A,
18:55
Speaker 3: which you guys are just going to go seven A. Yeah,
18:58
Speaker 3: so it's division and seven A, which is a law.
19:01
Speaker 3: But we're not going to get into that because I
19:02
Speaker 3: just don't think you guys actually care too much. Like,
19:05
Speaker 3: I've found this stuff, and now you know what I
19:08
Speaker 3: want you to take from this. If you want to
19:11
Speaker 3: sound smart, you'd be like, Okay, well a fringe benefit tax.
19:14
Speaker 3: It's not division seven A, Victoria. And if you say
19:17
Speaker 3: that to an accountant, they'll be like, oh, she knows,
19:19
Speaker 3: she must be serious accounting. Okay, So question for your
19:25
Speaker 3: v Yeah, I love questions.
19:27
Speaker 2: From an employer perspective. Yes, it's salary packaging a little
19:32
Speaker 2: bit of a nightmare, or is it a good way
19:33
Speaker 2: of like paying your employees less? Sort of like what's
19:38
Speaker 2: the vibe?
19:39
Speaker 3: Look, I think it's a good thing, and I think
19:40
Speaker 3: it's one of the things that can actually help make
19:42
Speaker 3: you a place of employment a little bit more attractive.
19:44
Speaker 3: Is there's more benefits involved, and often they don't actually
19:48
Speaker 3: take up too much more time or energy or money
19:50
Speaker 3: to implement. But in saying that, everybody's different, and some
19:55
Speaker 3: people might not see the value of them, but also
19:57
Speaker 3: some people might not be able to implement them as
20:00
Speaker 3: as others, So it's going to be different for everybody.
20:03
Speaker 2: Gotcha, so be What about from a personal perspective, from
20:07
Speaker 2: an employee's perspective, what are the downpolls of salary packaging?
20:10
Speaker 2: Because I feel like if it was flawless, we'd all
20:13
Speaker 2: be doing it and we'd all know what it was
20:15
Speaker 2: before this int this episode.
20:16
Speaker 3: Yeah, and I feel like a lot of people do
20:19
Speaker 3: think it is this flawless plan to create wealth and
20:22
Speaker 3: get a better car. And I think the main limitation
20:24
Speaker 3: of salary sacrificing that I really want you guys to
20:27
Speaker 3: remember is that first salary sacrificing can sometimes we us
20:30
Speaker 3: into upgrading things that we don't need to upgrade. So
20:33
Speaker 3: we were talking about this before, like do you really
20:36
Speaker 3: need a new car or do you just like the
20:37
Speaker 3: idea that you can get a new car? Yeah, And
20:40
Speaker 3: sometimes understanding if it's actually worth lowering our salary for
20:44
Speaker 3: a new car if we bought one two years ago
20:47
Speaker 3: might not work. But then I think you need to
20:49
Speaker 3: remember as well that these benefits aren't free. It's not
20:52
Speaker 3: oh hey cool, I can add this to my income
20:55
Speaker 3: and my income will increase, and that's not it at all.
20:58
Speaker 3: You're still ending up paying for them. You're just making
21:01
Speaker 3: a sacrifice, so you're choosing that benefit over having extra
21:04
Speaker 3: cash in your account each week or month or yeah.
21:07
Speaker 3: And secondly, I want you to be really pragmatic and
21:11
Speaker 3: how negative this might sound, and obviously I'm negative Nancy
21:14
Speaker 3: on this podcast, but I want us all to be
21:17
Speaker 3: able to stay afloat if things changed and we lost
21:19
Speaker 3: our jobs or took a pay cut. So would you
21:21
Speaker 3: still be able to make those repayments on that car
21:23
Speaker 3: if you didn't have an income anymore? And I think
21:26
Speaker 3: that we need to prioritize future US right, Like if
21:29
Speaker 3: you're looking at salary packaging and you're like, oh my gosh,
21:32
Speaker 3: I'd love to salary package you know, some food and beverage,
21:35
Speaker 3: Like great, fantastic, But can you tell me if you
21:38
Speaker 3: have an emergency account first? Like, can we make sure
21:40
Speaker 3: that future US is financially stable and okay before we
21:44
Speaker 3: make decisions that are a little bit more swayed to lifestyle,
21:48
Speaker 3: Because if you do not have your emergency account set
21:50
Speaker 3: up yet, I'd be doing that and then I'd be
21:52
Speaker 3: considering any benefits that we can add.
21:55
Speaker 2: To that, gotcha. So according to the big woman, Vicki hoseelf.
22:01
Speaker 3: That's such a beautiful name. Honestly, growing up, I was
22:03
Speaker 3: always like, one day people are going to refer to
22:06
Speaker 3: me as.
22:06
Speaker 2: Vicki d Has anyone ever called you that until this point? Ah?
22:10
Speaker 3: Yeah, no it was. It was gross. I used to
22:15
Speaker 3: crack it and then I've just given up. I'll just
22:17
Speaker 3: laid down, let it it. Let you guys walk all
22:20
Speaker 3: over me.
22:21
Speaker 2: Ah love you girl. So according to you, then Victoria
22:25
Speaker 2: Devine is salary packaging as good as it sounds, and
22:29
Speaker 2: is it something we should be looking at.
22:31
Speaker 3: Yeah, absolutely, have a look at it. Make sure it
22:33
Speaker 3: works for you. If your place of employment offers it
22:35
Speaker 3: and you're not making use of it, have a look
22:36
Speaker 3: at that. Like it's kind of a no brainer for
22:39
Speaker 3: the things that are fixed costs that you are paying.
22:42
Speaker 3: And I mean, if you can get your rent on
22:44
Speaker 3: salary packaging money, weird. Yeah, But if you're looking at
22:48
Speaker 3: it for a new car that maybe you don't need,
22:50
Speaker 3: or you're looking at it to add a whole heap
22:52
Speaker 3: of money to a food and beverage car that you
22:55
Speaker 3: can't buy groceries with and can only go out to
22:57
Speaker 3: restaurants like I would have a look at it, saying
23:00
Speaker 3: it's a bad idea. I would just make sure that
23:02
Speaker 3: you're making the right money decision for your life.
23:05
Speaker 2: Beautiful. So, if we do want to look at salary packaging,
23:09
Speaker 2: where do we start.
23:10
Speaker 3: You start by annoying your employer. I'm saying, hey, maybe
23:13
Speaker 3: I was just wondering what are my options here. Obviously
23:16
Speaker 3: go to HR if you've got a HR department, because
23:19
Speaker 3: they are in charge of all of the salary packaging plans,
23:22
Speaker 3: and then just wigh up the pros and cons. Don't
23:25
Speaker 3: opt for it if you don't need the benefit or
23:27
Speaker 3: would need the money more than that, And if you're
23:29
Speaker 3: still not sure, have a chat with your accountant or
23:32
Speaker 3: a financial advisor for a little bit more tailored information.
23:35
Speaker 2: Simply stunning, all right, So, to wrap up today's show,
23:39
Speaker 2: salary packaging is basically a really neat way of paying
23:42
Speaker 2: less tax by opting to take some of our salary
23:45
Speaker 2: in the form of benefits. Is Indeed, not all workplaces
23:48
Speaker 2: will offer it, but lots of the larger corporations will,
23:51
Speaker 2: So it's definitely worth chatting to your place of employment
23:54
Speaker 2: to see what could be possible for you if you're
23:56
Speaker 2: thinking it could be an option. And finally, it can
23:59
Speaker 2: be a really great way of bumping up your super
24:02
Speaker 2: if that's your thing. But Vickid, sorry, that just slid out.
24:07
Speaker 2: I think that is all we have time for today.
24:09
Speaker 3: I would like you to refer to me as Victoria
24:11
Speaker 3: Catherine Devine Catherine Kathy on Kathy Day. All right, I
24:18
Speaker 3: wish I'd never said that. So we're just gonna head off.
24:21
Speaker 3: But before we head off, we'd like to acknowledge and
24:23
Speaker 3: pay respects to Australia's Aboriginal and Torres Strait Island. To
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Speaker 3: people's the traditional custodians of the lands, the waterways and
24:30
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Speaker 3: to learn. We pay our respects to elder's past and present,
24:38
Speaker 3: and we share our friendship and our kindness.
24:40
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25:16
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25:49
Speaker 1: Bye,