Salary Packaging – Lay Staff
Version
Approved by
Current as at
1.0
1
Senior Leadership Team
13 May 2014
Policy Statement
The Uniting Church in Australia, Synod of Victoria and Tasmania (the Synod) acknowledges the
important contribution of its employees and aims to provide a salary packaging policy to assist
with the attraction and retention of high quality employees. It is the policy of the Synod to offer
salary packaging to all full time and part time employees who have satisfactorily completed their
probationary period.
1.1 ETHOS AND VALUES OF UNITING CHURCH IN AUSTRALIA
As an employer, we express the ethos of Christianity to love one another, to live justly and to
seek the reconciliation and renewal of all creation by respecting ourselves and all whom we serve
and employ. We strive to do so by:
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Being inclusive
Acting and advocating for a just society
Working for peace and justice in the World
Having an openness to the wisdom of people of other faiths and views
Implementing environmentally sustainable practices
In our workplace we value justice, inclusion, compassion, shared leadership, respect, integrity,
wise stewardship and innovation.
Consideration should be given to the ethos and values in seeking guidance and interpretation
surrounding this policy.
1.2
SCOPE
This policy applies to all permanent full time and part time Synod employees and
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operates in conjunction with the terms and conditions of employment of Synod
employees;
has been developed within the framework of existing legislation and may be varied or
discontinued by the Synod in response to legislative or other regulatory changes
which are disadvantageous to the organisation.
not all employees will benefit from salary packaging.
People matter.
Salary Packaging – Lay Staff Policy
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1.3
PRINCIPLES UNDERPINNING PROCESS
a)
b)
c)
d)
e)
1.4
Natural justice / procedural fairness
Safe Place
Understanding of Power
Boundaries
Privacy / confidentiality
DEFINITIONS
Fringe Benefits
Fringe Benefits Tax
Fringe Benefits Tax
Year
Grossing Up
Packaged Salary
Component
Taxable Fringe
Benefits
Total Remuneration
Cost
1.5
A fringe benefit is the right, benefit, provision of a service
or facility, that is provided to an employee in relation to the
performance of their work and which is not remuneration
by way of salaries and wages.
Fringe benefits tax (FBT) is the tax payable to the ATO
incurred on providing fringe benefits to employees.
The fringe benefits tax year runs from April 1st, to March
31st. Benefits paid to, or on behalf of the employee during
this period, are reported on the employees payment
summary for the income tax year ending the following June
30th. *Note it is paid benefits, not accrued or entitlement to
benefits which is reported.
This refers to the cost or value of the fringe benefits
provided to the employee being recalculated to reflect what
they would have cost the employee, had the employee
paid for them out of after tax salaries and wages income.
The maximum grossed up amount of benefits that can be
claimed on a reduced FBT rate by a rebatable employer is
$30,000. This equates to a maximum of $16,049 and
minimum of $14,529.
Taxable salary payable excluding ‘Fringe Benefits’
component, but including taxable allowances and
additional payments not included for the purposes of
remuneration packaging. Normally the figure used for the
calculation of PAYG tax.
Rebatable employers are taxed at a reduced rate for
amounts up to $30,000 gross up and then at the full rate
above.
Items included in this cost are the employees base salary
plus position related benefits, salary packaging and FBT
i.e. the total to the employer of all cash and non cash
benefits including: motor vehicle, housing, employer
superannuation contributions, annual leave loading.
POLICY OWNER
This policy is implemented and maintained by the Director People and Culture, UCA Synod.
People matter.
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1.5
FURTHER ASSISTANCE
Any staff member who requires further assistance in understanding or applying this policy,
can contact a member of the People and Culture team.
1.6
POLICY REVIEW
This policy will be reviewed every two years or earlier if required.
1.7
RELATED POLICIES AND PROCEDURES
Recruitment and Selection Policy
Remuneration Policy
2.0
Policy in Practice
Salary Packaging for Synod employees will be offered in accordance with this policy and
associated guidelines. The Synod is a rebatable employer for tax purposes and salary
packaging, although not all employees will be meet the legislative and taxation guidelines.
The Synod uses EPAC Salary Packaging except for superannuation. For salary sacrificing
to superannuation please contact the Payroll Officer.
EPAC Salary Solutions
Customer Service Hotline: 1800 680 180
Customer Service Fax: 1800 221 998
Internet: www.epacsalarysolutions.com
Email: customerservice@epacsalarysolutions.com
2.1
WHAT IS SALARY PACKAGING?
Salary Packaging is a means for accessing tax concessions that the Australian Taxation
Office (ATO) allows not-for-profit organisations to offer their employees.
2.2
WHO IS ELIGIBLE FOR SALARY PACKAGING?
The Synod full time and part time employees who have satisfactorily completed the required
probationary period or extended probationary period are eligible for salary packaging. Staff
who are interested in salary packaging are responsible for obtaining their own financial
advice in relation to costs and benefits.
2.3
IS THERE A SALARY PACKAGING FORMULA?
There is no standard salary package formula that will suit every employee and all packages
will be a negotiated arrangement between the employer and employee. Normally, the
employee will have an after-tax net benefit (at no additional cost to the employer) through
salary packaging.
People matter.
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2.4
HOW IS SUPERANNUATION CALCULATED ON A SALARY PACKAGE?
Employees entering into salary packaging arrangements will be paid Superannuation
Guarantee Contribution on the full value of the package, rather than on cash salary only.
2.5
INFORMATION AND SIGNED AGREEMENT
Employees who elect to salary package will be provided with written information about the
impact of salary packaging, including advice of costs, calculation of the expected benefits
and an agreement.
Both parties must sign an agreement which documents the terms of the arrangement prior to
implementation of salary-packaging arrangements.
2.6 EMPLOYEE PAYMENT SUMMARY
Under current ATO legislation all salary benefits must be reported in a separate section on
an employee’s payment summary at the grossed up Type 2 rate amount. This is irrespective
of whether it is a Type 1 or Type 2 benefit. While this amount will not attract income tax, it will
be taken into account as income when assessing the Medicare levy and some other
government payments and allowances.
2.7
BENEFITS WHICH MAY BE SALARY PACKAGED
A range of options exists in relation to salary packaging benefits, however the Synod
reserves the right to refuse particular benefits which may not be consistent with the Synod’s
ethics and values.
Examples of benefits which may be salary packaged include:
(a) groceries
(b) petrol
(c) bills
(d) retail shopping
(e) personal loan payments
(f) mortgage payments
(g) school fees
(h) car payments and running costs
(i)
All benefits must be non-cash items and would usually be paid to a third party. However, an
employee can be reimbursed for expenditure they have incurred, but only after a receipt has
been provided to EPAC Salary Solutions.
2.8
SALARY PACKAGING AND TAX DEDUCTIONS
Employees cannot package an item that they subsequently wish to claim as a deduction on
their tax return (for example, self-education expenses).
People matter.
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2.9
SYNOD MOTOR VEHICLES – PRIVATE USE
The amount of reportable fringe benefits, and the grossed up $30,000 limit before the full
Fringe Benefit Tax (FBT) becomes payable, includes any private use of a Synod car as well
as the salary packaging. Commuter use will, almost without exception, be deemed by the
ATO to be private use. This applies even if the employee is on call, has no entitlement to
use the vehicle for any private activity other than commuting, and the vehicle is a "pool car".
This can potentially place someone over the $30,000 cap therefore it should be taken into
account when finalising the amount the employee will be allowed to salary package if there is
a likelihood they could be provided with commuter or greater use of an agency vehicle within
the FBT year.
2.10 CONDITIONS OF PROVISION OF SALARY PACKAGING TO THE SYNOD
EMPLOYEES
It is the intention of the Synod to maintain a salary packaging program for eligible staff.
However, where the relevant legislation, including but not limited to the Fringe Benefit Tax
Act 1986 and the Income Tax Assessment Act is amended or other changes occur including
but not limited to the sale or transfer of the business to another entity or person which have
the effect of reducing or withdrawing the benefits of salary packaging to the Synod or the
employee, the Synod will not be liable to make up the salary benefits lost by a staff member
as a consequence of such changes.
Where any changes increase the cost of packaging to the Synod, then these costs shall
either be paid by the staff member participating in packaging or the staff member or the
Synod may choose to cease the arrangement.
For clarity, the parties agree that in the event that the salary packaging ceases to be an
advantage to an employee, or an employee decides, for whatever reason, to stop
participating in salary packaging, arrangements shall be made to reinstate the salary to the
agreed amount packaged. Any costs associated with the conversion to salary shall be borne
by the employee and the employer shall not be liable to make up any benefit lost as a
consequence of an employee's decision to convert to salary.
The Synod makes no claim or representation regarding the financial benefits of salary
packaging for any individual employee and recommends staff considering salary packaging
seek independent financial advice. The Synod shall not be responsible in any way for the
cost or outcome of such advice.
2.11 SALARY PACKAGING AND TERMINATION OF EMPLOYMENT
The total salary will be used as the basis for calculating all termination/ redundancy
payments e.g. annual leave, annual leave loading, long service leave, severance and
payments in lieu of notice.
If the employee has a credit balance in their salary packaging account at the date of
termination the amount owing will be paid on the date of termination and will be taxed as
normal salary and wages.
People matter.
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