What is a Defence Salary Sacrifice Agreement?

Salary packaging and salary sacrifice are two options available to Defence members. Salary packaging allows employees to make after-tax contributions to their super fund or their spouse’s super fund. This is in addition to the salary sacrificed amount. The employer must make a matching after-tax employee contribution if you choose to salary package a motor vehicle.

Salary packaging

Salary packaging is a way for Defence employees to restructure their income so they can purchase things they need and want pre-tax. For example, salary packaging can help an employee buy a motor vehicle, airline lounge membership, or child care at a Defence or Commonwealth child care facility. It also can allow an employee to purchase uniforms.

Salary packaging allows the employee to pay off an approved benefit or cash allowance before he or she is taxed. It also gives the employee convenience and better use of their income. Defence employees can use salary packaging through their employer, union, or an independent financial adviser.

Salary packaging is an ATO-approved way to reduce an employee’s income tax. It helps employees spend more money and keeps more of their income—the benefits of salary packaging range from lower income taxes to higher take-home pay. Depending on the employer, salary packaging can help employees with car payments, mortgage repayments, rent, and even credit card payments. It is used by more than 60% of health and charity employees in Australia.

Salary sacrifice

A defence salary sacrifice agreement is an agreement between the employee and the employer to make an agreed-upon salary sacrifice, usually in writing. However, it can also be verbal. In any case, it is important to have clear documentation of the agreement, as renegotiation may be possible at any time.

Salary sacrifice arrangements can benefit both employees and employers. They can be made on a one-off basis or regularly. However, not all employees are eligible for salary sacrifice. Those earning less than the national minimum wage will not qualify. The arrangement can also reduce the tax an employee owes if they have to pay tax on that money.

In Defence, a salary sacrifice can reduce the cost of a motor vehicle. It can also help to reduce the carbon footprint of the vehicle. The employee may be able to benefit from a better quality vehicle under a salary swap. This option is a great way to reduce your carbon footprint without selling your old car.

Benefits

Salary Packaging is a way for Defence employees to save on tax on certain items. Defence employees are eligible to save up to 47% on approved items. This can include things like superannuation and child care. Smartsalary is proud to partner with the ADF. Learn how salary packaging works and how it can save you money.

Salary Packaging allows Defence employees to restructure their income and purchase items such as motor vehicles, airline lounge membership, and childcare at Commonwealth and Defence childcare facilities. It can also save money on uniforms. It’s a great way to pay for the things you want and save on taxes.

Expenses that cannot be salary sacrificed

Defence expenses that cannot be salary sacrificed are directly related to the performance of the duties of a defence officer. This includes travel costs, attendance at meetings, and other expenses. To be salary sacrificed effectively, these expenses must be covered by contributions to a complying fund. The salary sacrificed must be at least 0.5% of the gross salary. It also affects AWE. In order to be effective, salary sacrifice arrangements must include at least 0.5% of superannuation contributions.