Apa seminar 2012
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This document discusses recent changes and opportunities regarding salary packaging in Australia. It covers changes to packaging cars, the end of packaging for living-away-from-home allowances, new packaging opportunities such as for public transport and electricity, and monitoring the $25,000 cap on superannuation contributions. The key takeaway is that salary packaging can increase employee incomes and deliver tax savings, but employers must regularly review benefits and ensure compliance with tax rules.
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Apa seminar 2012
- 1. Salary Packaging in 2012/13 Cars, Super and LAFHA Australian Payroll Association
- 2. Contents 1. Salary Packaging: the basics 2. Cars: managing the 2011 changes in 2012 3. 30 September 2012: the end of LAFHA? 4. Superannuation changes – watch out for the cap! 5. New packaging ideas and opportunities.
- 3. The Basics – No Packaging $150 Salary $50 Tax The ATO ATO’s Bank ATO’s Bank The ATO Account Account Employer: Employer: $100 Post-tax $150 Salary $150 Salary Employee’s Employee’s Employee Employee Bank Account Bank Account $0 $100 Benefit
- 4. The Basics - Packaging $50 Salary $16.75 Tax The ATO ATO’s Bank ATO’s Bank The ATO Account Account Employer: Employer: $33.25 Post-tax $150 Salary $150 Salary $100 Salary Employee’s Employee’s Employee Employee $33.25 Bank Account Bank Account Salary Salary Packaging Packaging Account Account $100 Benefit
- 5. The Basics: Benefit Categories •Cars •Exempt Benefits •Otherwise deductible benefits •Concessional benefits •Public Hospital/PBI benefits •In-house benefits
- 6. Salary Packaged Cars The 2011 Changes There are now two categories of car benefit: •Old (or “Grandfathered”) Vehicles •Transition Vehicles Statutory % 2012/13 Annual Kilometers Old Transition 0 – 14,999 26% 20% 15,000 – 24,999 20% 20% 25,000 – 39,999 11% 17% 40,000 + 7% 13% Transition vehicles moving towards flat 20% rate
- 7. Salary Packaged Cars The 2011 Changes Grandfathered vehicles •Differing priorities: –Over 25,000km: Protecting ‘grandfathered’ status is critical! –Under 15,000km: Losing ‘grandfathered’ status is critical! But deliberately bringing about new rate is tax avoidance. •“Commitment Time” dictates result •New Vehicle •Refinance of existing vehicle •Change in employer
- 8. Salary Packaged Cars The 2011 Changes Novated Leases: Annual KM travelled
- 9. The End of LAFHA? •LAFHA rules change from 1 October 2012: –‘Usual place of residence’ must be an Australian address: no more expats –Test to be tightened: usual residence must be ‘available’? –Allowance format to be abolished – reimbursement or tax deduction –Result: only a handful of employees will be eligible but LAFHA .
- 10. New packaging opportunities •In-house benefits are all the rage: –Public Transport –Electricity –Water Rates? •Relocation benefits: replacement for LAFHA? –Temporary accommodation –Home sale and purchase costs –Removal, transport and travel costs
- 11. Superannuation •It’s all about the ‘cap’ •$25,000 - all employees •Includes SGC amounts (except some defined benefit State funds) •Whose responsibility is it to monitor? •Are we moving to a 12% SGC rate?
- 12. Going forward . . . •Public Hospitals & Charities: NFP Tax Concession Working Group •Cars: Transition to 20% flat rate finishes on 1 April 2014 Takeaway Salary packaging remains an effective way to increase employee effective incomes and to deliver substantial tax savings Employers should regularly review their benefit menu to ensure: 1.employees are offered a full range of salary packaging opportunities; and that 2.those opportunities comply with the latest tax rules and conditions.