2017 Tax Tip #15 - Review Salary Sacrifice Arrangements

Posted by Georgia Kirby on Jul 7, 2017 7:00:13 AM

Salary sacrifice arrangements can be considered by employees, under which their gross salary may be surrendered to obtain either a packaged car for fringe benefits tax (FBT) purposes, or they can make additional contributions to their superannuation.

When calculating a motor vehicle fringe benefit under the statutory formula method a 20 per cent flat rate applies, regardless of how many annual kilometres it travels. However, there may still be some tax savings in packaging a car under these rules when compared to the price if  all operating expenses are financed from your net salary.

In addition, under these obligations employees who conduct work-related travel predominately by car may be able to obtain tax savings by calculating the FBT paid on the car under the operating cost method, rather than financing their car expenses from after-tax salary.

A CPA Australia-registered tax agent should be approached for advice as to whether any salary sacrifice arrangements will be tax effective.

Topics: TAX


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