The folks from Intrust Super read my blog post on superannuation back on 5 March and forwarded this link below. It is a table that looks at two things:
1) Your salary.
2) When you plan to retire.
And with this information they try to approximate how much of your salary you should be putting toward super.
Sometimes it’s easy to forget just why salary packaging plays such an important part in Australian community life. We tend to see it only in terms of what it can do for us – i.e. provide an opportunity to save money – and we forget the valuable (even critical) contribution it makes to Australia’s public hospital and not-for-profit sectors.
By using the tax-free cap salary packaging concessions hospitals and not-for-profits are able to take money that would otherwise be required to fund salary and use it instead to increase service provision. “What sort of services?” you might ask – well we’ve asked The Chris O’Brien Lifehouse at RPA, one of our new packaging clients, to give you an idea . . .
About The Chris O’Brien Lifehouse at RPA
Through our vision of uncompromising care, The Chris O’Brien Lifehouse at RPA will bring hope and empowerment to help improve the lives of everyone living with cancer, no matter who they are or what type of cancer they have.
All of us will be touched by cancer in some way, whether it’s our own diagnosis or that of a family member, friend or workmate. The Chris O’Brien Lifehouse at RPA will bring together all elements of cancer research, treatment, care and support within one centre of excellence. We will offer the latest research and technology, advanced medical and complementary therapies, as well as emotional support and sanctuary in one place. We will turn new discoveries into better cancer care for our patients. We want to make things easier for people with cancer, their friends, families and carers. We aim to put people first so that those diagnosed with cancer no longer feel alone negotiating the many confusing elements in dealing with their illness.
In addition to building the new cancer centre, The Chris O’Brien Lifehouse at RPA continues to support the activities of the existing Sydney Cancer Centre. Over the next three years, whilst our new organisation and facilities are being built, the Sydney Cancer Centre at RPAH will treat several thousand patients living with cancer. These people need and deserve the best possible care and support. Donations made to The Chris O’Brien Lifehouse at RPA will help to make this possible, by providing funds for research and clinical programs. Donations are also used to help with the construction of the new facility.
Significant progress has been made on The Chris O’Brien Lifehouse at RPA. Demolition work commenced on site in early 2010 and construction of the new facility will commence later this year. The new facility will open its doors in 2013.
So while salary packaging does help you to save money, it also helps Lifehouse to provide care to Australian cancer victims. Now that’s what I call a ‘win-win’ situation.
If you want to know more about Lifehouse then I’d encourage you to have a look at their website and see some of their inspirational videos . . .
The Australian’s IT section has just run an article (quoting heavily from Simon Ellis, our Senior Tax Advisor!) outlining the salary packaging industry’s general response to the question of iPad packaging. The article makes clear that the industry is broadly following SmartSalary’s lead, and exercising a fair amount of caution before adding iPads to the menu of available packaging items.
As the article notes, it is only where an individual‘s employment duties involve regular tasks requiring access to an iPad (or similar machine) that the ATO will accept salary packaging. We interpret this to mean that the ATO is not going to test packaging arrangements by looking at the actual use of the machine – it’s going to test them by looking at your ordinary employment duties, and deciding whether those duties justify access to an iPad.
Simon tells me that this approach is consistent with ATO guidelines on laptops, as set out in ATO ID 2008/127.
Thus SmartSalary’s cautious approach to packaging iPads seems to have been warranted. We will, of course, continue to liaise with our employer clients in this regard but for the time being iPads are likely to stay off the menu for many of our packaging customers.
iPad fever is gripping the globe, and SmartSalary customers are certainly not immune! We’re getting more and more queries about whether our customers are allowed to salary package these machines so I thought now would be a good time to offer a quick reminder of how the salary packaging rules work when it comes to devices such as tablet computers.
Since I’m not the expert in this field I have, once again, asked our Senior Tax Advisor to pull together a quick summary of the rules . . . . take it away Simon!
Thanks Deven – the first thing to note is that it doesn’t really matter whether tablet computers are considered laptops, PDAs or even mobile phones as the salary packaging concession no longer revolves around the definition of these items. Any “portable electronic device” can now potentially access the concession as long as two requirements are met:
1. The device must have been acquired for the primary purpose of use in your actual employment duties, and
2. You must not have salary packaged any similar items earlier in the relevant FBT year.
Employers who see ipads as potential work tools for their employees are starting to instruct SmartSalary to include them in their salary packaging menu, and we’ll be sending comms to those employees as this benefit comes on line. We’ve asked the ATO to clarify what devices it considers to be ‘similar’ to tablet computers for the purposes of requirement 2, but for now, while we wait to hear from the ATO, SmartSalary is taking a conservative view and packaging tablet computers as though they are laptops (i.e. we won’t allow both in the one FBT year).
So keep your eyes and ears peeled for further updates from us or your employer!
Once again I am going to hand over the blog to our Senior Tax Adviser Simon Ellis, this time to give you a rundown of the 2010/11 Federal Budget:
The Australian Federal Budget was handed down at 7:30pm Tuesday May 11. This was the third budget for the Rudd Labor Government, and its first in an election year. To some extent the budget builds on the policy priorities already released as part of the Government’s formal response to the Henry Review.
From a salary packaging point of view the budget does not offer any significant changes or challenges. Unlike previous Rudd Government budgets, salary packaging rules were left untouched this year meaning that all salary packaging items will remain available.
In this regard it’s worth noting that there were a number of benefits being closely watched in the run-up to this budget (and the Henry Review) as various sources had indicated that there was some potential for change. The lack of movement around these items in this year’s budget allows us to draw a number of conclusions:
All employees
• Cars: no change to the vehicle concession and therefore salary packaging can continue as in previous years
• Superannuation: can still be salary packaged up to unchanged concessional contribution caps
Employees of public hospitals and not-for-profits
• Tax free threshold: no reduction or abolition of the tax free threshold benefit.
• Meal Entertainment: no roll back of FBT concession therefore meal entertainment still a packageable item
• Holiday Accommodation and Venue Hire: no roll back of FBT concession for entertainment facility leasing expenses therefore holiday accommodation and venue hire still packageable (where allowed by employer)
I’ve summarised the changes in the following short video presentation:
Overall the budget has not been detrimental to Australian salary packaging arrangements, nor has it required any significant change to packaging systems or procedures.
This means that SmartSalary will continue to focus on the delivery of simple, safe and valuable benefits without disruption for the foreseeable future.
The potential impact of the Henry tax review on salary packaging is explained by our Senior Tax Adviser, Simon Ellis, in the following short video clip:
The long awaited Australia’s Future Tax System review (“the Henry review”) was published on 2 May, along with the Federal Government’s formal response to its recommendations.
The review contains proposals for wide-ranging reforms to almost all aspects of Australia’s taxation system, including several areas that have some limited potential to impact on salary packaging programs. The Government’s response effectively divides the Henry review’s recommendations into three categories:
Recommendations that the Government will immediately adopt
Recommendations that the Government will not immediately adopt, but will consider further in the medium to long term, and
Recommendation that the Government specifically rejects and will not adopt.
This summary focuses on the key salary packaging recommendations contained in the Henry review and the Government’s response to those recommendations in order gauge any potential impact on Australia’s salary packaging environment:
Henry review recommendation
Government’s response
Impact on Salary Packaging
Recommendation 9(b): The current formula for valuing car fringe benefits should be replaced with a single
statutory rate of 20 per cent, regardless of the kilometres travelled.
Government will not immediately adopt, but will consider further in medium to longer term.
No immediate impact.
If adopted in the medium to long term this recommendation will result in:
an improved or unchanged salary packaging position for more than 50% of all individuals currently packaging (i.e., those on the 20% or 26% rates, and
The loss of some, but not all, of the tax savings for those salary packaging a car and using the 7% and 11% rates.
Potential for significant uptake by those currently not packaging a vehicle and who drive less than 15,000 kilometres per year i.e. those for whom the 26% bracket to date has not been sufficiently attractive to package
Recommendation 9(e) and Recommendation 43
The FBT ‘threshold’ concessions for Public Hospitals and Not For Profits should be phased out
Government specifically rejects and will not adopt.
No impact.
This recommendation has been formally rejected and should not be introduced at any stage by the current Government.
As well as what was covered by the recommendations in the Henry review it is relevant to note was what was notincluded:
Items not included
Government’s response
Likely impact on Salary Packaging
The FBT concession for meal entertainment benefits provided by Public Hospitals and Not For Profits
No response, although potentially relevant that the Government has committed not to implement “any changes to the tax system that harm the not-for-profit sector, including removing the benefit of tax concessions . . .”
It remains possible that this concession will be changed in the upcoming budget, even though any reduction would appear to contradict the assurance outlined in the Government’s response to the Henry review.
Other recommendations with some potential to impact salary packaging programs were included in the review’s findings but were not commented on in the Government’s formal response. These items, listed in the appendix to this summary, are unlikely to be picked up in the immediate term, but may be the subject of further discussion in the medium to long term.
Overall, while the recommendations of the Henry review have the potential to change Australia’s salary packaging landscape, the Government’s lukewarm response to most of them and outright rejection of others means that the impact on the salary packaging activities of Australian employersis likely to be minimal.
The Federal Budget is, however, due to be handed down on May 12 and there remains a possibility that other tax changes relevant to salary packaging, but not flagged within the review recommendations, will be included.
SmartSalary will be analysing the Budget outcomes in this regard and releasing further analysis at that time.
SmartSalary is the gold sponsor for the South Australia Police and Emergency Service Games (SAPES). It is our way of giving back to the community while also raising awareness about the tax benefits of salary sacrifice. Recently our GM of Business Development, Tony Ghosn, had the opportunity to give an interview on Sundo’s Big Breakfast on 5MU. Check it out – he’s a natural for radio!
I received this article from our carbon offset partner Greenfleet, the other day…. certainly makes a thought provoking read:
We may not be able to pronounce Eyjafjallajökull – the name of the Icelandic volcano that grounded thousands of flights in Europe this week – but thanks to the team at Information is Beautiful and the Nordic Volcanological Institute of the University of Iceland we can estimate the greenhouse gas emissions being saved as a result of this natural phenomenon.
The diagram below highlights the greenhouse gas contributions of the European aviation industry and Eyjafjallajökull in red, with the black triangle showing the greenhouse gas savings associated with the cancellation of 60% of flights across Europe. As you can see the volcano is a relatively small player in the global greenhouse gas equation, and the savings resulting from flight cancellations are much greater.
This comparison is probably also good fodder for people who say that dramatic greenhouse gas reductions are going to cripple industry – as this event has definitely adversely affected a number of industries across Europe and the world. However, we’re not advocating this sort of event to reduce global emissions.
But we do think it is important to illustrate the very hefty contribution of greenhouse gas emissions from human sources when compared to natural sources – even such immense events as the eruption of Eyjafjallajökull. Human activities are indeed a very significant contributor to global greenhouse gas concentrations and climate change.
Today I’m turning over the blog to my Senior Taxation Adviser Simon Ellis, who has some interesting thoughts and questions about packaging iPads. Take it away Simon . . . .
As many readers already know, a salary packaging opportunity exists for portable electronic devices where they are intended “primarily” for use in undertaking employment duties.
To date this opportunity has generally been used to package the dynamic duo of work-related equipment, the mobile phone and the laptop, but with the impending Australian release of the iPad are we about to see a third product enter the packaging arena? Are tablet computers going to be the next big thing in portable business tools?
At the moment, with iPads as the market leader (and Apple’s monopoly on ‘cool’), these computers seem to be aimed more at media consumption than any serious business application, but it seems likely that the future of these computers will see them used for a wide range of business applications.
So what do you think? Are there any aspects of your current job that you think would benefit from access to a tablet computer as opposed to, say, a traditional laptop? Do you think you could justify a ‘primary’ work purpose for this new breed of portable electronics if they were offered as a packaging option?
SmartSalary’s parent company, Paxys Australia, this week completed the asset purchase of a fleet management business based in Beaconsfield Victoria called Webfleet.
Webfleet specialises in managing fleets of company cars, whilst SmartSalary specialises in managing novated leases and other salary sacrifice benefits. Both companies have strong focus on the government and health sectors, and also service some large corporate clients. So although we speak a common language, the two businesses offer distinctly different services.
As part of the sale process, we met with some of Webfleet’s clients – they were all remarkably satisfied! The main drivers of satisfaction are Webfleet’s customer-oriented staff and the user-friendly systems.
In fact, the clients are so satisfied that any changes will be kept to an absolute minimum.
Managing novated leases and company car fleets require many of the same skills, and as such we are confident that the Webfleet and SmartSalary teams will be able to work well together and learn from each other.
SmartSalary and Webfleet have several clients in common today. If we are able to learn and grow together, our hope is that going forward we will be able to offer our complete vehicle solution to many more organisations across the country!
We are all very excited about the Webfleet acquisition and look forward to continuing to innovate and to better serve our clients!
