Policy Statement 01/2013
Issued: May 2013
SALARY PACKAGING POLICY
1.
Purpose
To inform employees of their eligibility for salary packaging and set out the salary packaging
arrangements in the ACT Public Service. The policy may be amended by the Head of
Service.
The Head of Service will:
a) promote and maintain the Policy on salary packaging in the ACT Public Service;
b) approve and review the menu of benefit items which can be accessed under salary
packaging; and
c) not restrict the type of motor vehicle available under novated leasing to employees,
except to ensure that they comply with Australian Tax Office (“ATO”) requirements.
This policy regulates the parameters, including the types of benefit items that can be salary
packaged, and the “in-house” administrative arrangements provided by Shared Services
Salary Packaging.
2.
Application
This policy applies to all ACT Public Servants employed under the Public Sector Management
Act 1994 and statutory office holders, including those which have the status of a Public
Benevolent Institution (“PBI”) as provided for under section 57A of the Fringe Benefits Tax
Assessment Act 1986.
3.
Legislative Reference
Key principles of this policy are consistent with:
a) Fringe Benefits Tax Assessment Act 1986;
b) Income Tax Assessment Act 1997;
c) Safety Rehabilitation and Compensation Act 1988;
Chief Minister and Treasury | Canberra Nara Centre
GPO Box 158 Canberra ACT 2601 | phone: 132281 | www.act.gov.au
d) Public Sector Management Act 1994;
e) Public Sector Standards 2006; and
f) Enterprise/Collective Agreements
4.
Direction Statement
The ACT Public Service needs to be well positioned to attract, retain and improve the
capability of our workforce and recognises employees need to have access to flexible
remuneration planning which better suits their individual needs and financial circumstances.
Salary packaging, also known as salary sacrificing, is one way to provide this flexibility.
Salary packaging is a tax-effective way for employees to receive their salary as a
combination of income and benefits. The income tax payable on the employee’s pre-tax
salary is replaced by a combination of income tax and Fringe Benefits Tax (“FBT”). The level
of FBT depends on the type and value of the benefit items packaged. Benefits are paid from
the employee’s pre-tax salary. The Menu of Benefit Items Available for Salary Packaging can
be located at Attachment A.
4.1
Policy Principals
The following principles underpin the salary packaging provision within the ACT Public
Service:

The ACT Public Service Salary Packaging Policy and practices are guided by the
provisions of the Fringe Benefit Tax Assessment Act, Tax Office Rulings,
Superannuation Legislation and other relevant Australian Legislation and
Enterprise/Collective Agreements, and will be amended from time to time to
maintain alignment with the changes to the legislation.

Access to salary packaging is voluntary for eligible employees.

Eligible employees are entitled to salary package up to one hundred percent (100%)
of their available gross salary for packaging purposes as benefit items, after the
deduction from salary of any compulsory superannuation contributions, fringe
benefits tax and other payroll deductions.

Any FBT payable on an employee’s proposed salary package is to be included for the
purposes of calculating an employee’s available gross salary, irrespective of whether
the employee chooses to make contributions towards the FBT liability.

Salary for packaging purposes is the relevant salary specified in the employee’s
Enterprise/Collective Agreement, Special Employments Agreement (“SEA”) or
Australian Workplace Agreement (“AWA”). It does not include variable or
occasional payments such as higher duties, shift and penalty allowances, overtime
payments etc. unless these have been converted to annualised salary. Such
additional payments will be paid as an adjustment to cash benefits.

An eligible employee’s salary for superannuation purposes (including the
productivity superannuation component) and severance or termination payment will
be the gross salary the employee would have received if not taking part in salary
packaging. Eligible employees will continue to contribute to their current
superannuation scheme, and the level of the employer contribution will be
determined on the same basis as applied before salary packaging. Benefits payable
under the Commonwealth superannuation schemes will continue to be calculated on
the same basis.

An eligible employee’s salary for compensation purposes, under the Safety
Rehabilitation and Compensation Act 1988, will not change as a result of salary
packaging. Eligible employees may continue their salary packaging arrangements
while on compensation. COMCARE will not provide any compensation for any loss of
taxation relief or investment benefit if the employee is retired because of a
compensation-related condition or ceases to be an eligible employee.

Eligible employees must give an undertaking, by agreeing to the terms and
conditions in the “Letter of Offer”, that they will not use salary packaging to reduce
their gross salary in an attempt to reduce their liability for any legally binding
payments such as child support, or to access Australian and Territory Government
provided benefits such as social security payments.
4.2
Taxation

The Fringe Benefits Tax Assessment Act 1986 and Income Tax Assessment
Act 1997 regulate the relevant tax payable on such benefits. Any changes to
this legislation, or any other legislation, that impacts on salary packaging
will be reflected in the employee’s remuneration package and will not
increase or decrease the total cost to the employer.

Employees of PBI organisations do not incur FBT on a part of the taxable
value of those benefit items that are subject to FBT. However, taxation
rules require the taxable value of any fringe benefit to be “grossed up” and
shown on employee payment summary at the end of each financial year.
This applies equally to all employees, including those working in PBIs.
Within the ACT Public Service only certain employees employed in ACT
Health, Health ICT and the ACT Ambulance Service are eligible for PBI
exemption.

Some benefit items may attract Goods and Services Tax (“GST”). Under
salary packaging arrangements, an entitlement to a Goods and Services
Input Tax Credit (“ITC”), payable by the ATO, may arise. Where there is an
entitlement to an ITC, Shared Services will claim and, dependent on the
setup of the employee’s initial pre-tax deduction, return the ITC to the
employee. If the employee’s initial pre-tax salary deduction is exclusive of
GST, Shared Services will pay the GST component of the employee’s
payment to the relevant company, and any ITC subsequently claimed on the
payment will be retained by Shared Services. If the employee’s initial pretax deduction is inclusive of GST however, any ITC claimed on the payment
will be returned to the employee.
4.3
Eligibility
Eligible employees include:
a) Directors-General, Executives engaged under the Public Sector
Management Act 1994.
b) Statutory office holders who have access to salary packaging.
c) A permanent officer or temporary employee (including a probationary
employee) employed under the Public Sector Management Act 1994 who is
covered by an Enterprise/Collective Agreement, a SEA or an AWA which
contains a clause providing access to salary packaging.
d) A casual employee, employed under the Public Sector Management Act
1994 who is covered by an Enterprise/Collective Agreement that contains a
clause providing access to salary packaging may, subject to the agreement
of the relevant Director-General (or his or her Delegate), be permitted to
salary package some items from the approved menu.
e) Officers who have been declared excess are not eligible to commence salary
packaging except with the approval of the relevant Director-General after
considering any possible liability for the Territory.
f) Judges are excluded from being able to salary package under the
Commonwealth Remuneration Tribunal Determination that provides for the
salary of judges of the Supreme Court of the ACT.
4.4
Financial Advice
a) Independent financial advice is highly recommended for all employees
before commencing salary packaging to discuss what packaging options are
suitable.
b) If an employee chooses not to obtain financial advice they are required to
complete a Waiver of Obtaining Financial Advice. Waivers are included in
the employee’s initial Letter of Offer to Salary Package, and are also
available from the Shared Services Salary Packaging Team.
c) Initial financial advice sought in relation to establishing a salary packaging
arrangement will be subject to the full rate of FBT. Subsequent meetings
with a financial advisor in relation to a salary packaging can be packaged as
an FBT exempt benefit item. Employees are advised to ensure that the
financial adviser is an authorised representative of an Australian Financial
Services license holder or the license holder themselves.
4.5
Salary Packaging Costs
All direct costs from salary packaging are to be met by participating employees,
including:
a) salary package payments;
b) all administration fees or charges;
c) any FBT and GST payable (where applicable);
d) any costs associated with obtaining initial financial advice; and
e) any costs resulting from changes to legislation or Government taxes or
charges.
Please note when employees sign the Letter of Offer to Salary Package, they are agreeing
to meet the above costs and therefore must ensure there are sufficient funds available.
Should there be an increase in taxation payable by the employer, including FBT or any
tax equivalent; the employer shall pass on such costs to the employee. The employee
must make payment of any additional amount at the end of the reconciliation period. In
the event of such a change, the employee will be entitled to amend their salary
packaging arrangements in accordance with the Policy.
Eligible employees are permitted to use the Employee Contribution Method (“ECM”) as
part of their salary packaging arrangements. The ECM involves the employee making a
contribution in after-tax dollars to reduce the taxable value of the fringe benefit.
4.6
Portability of Salary Packaging
An employee’s salary packaging arrangement is portable across all eligible agencies and
statutory offices. The employee is responsible for obtaining approval from the receiving
Directorate and for notifying Shared Services Salary Packaging of their change of
employer. Employees with PBI status should note that may lose their PBI exemption
transferring to another agency and should check with Shared Services Salary Packaging.
In the event that Administrative Amendments are issued which affect the operational
nature of an ACT Public Service Directorate or organisational unit, affected eligible
employees will continue to be able to salary package until a new industrial agreement or
contractual arrangement is in place.
4.7
Changing a Salary Package
An employee may review the components of his or her salary package and vary their
package items at any time.
The employee is entitled to have the components of his or her salary package reviewed if
the employer’s FBT status changes.
4.8
Ceasing Salary Packaging
Employees may cease salary packaging at any time.
In the event that the employee ceases employment or ceases to be an eligible
employee, all responsibility for their salary package will revert to the employee.
5.
Responsibilities
a) Chief Minister and Treasury

will maintain and promote the salary packaging policy; and

will approve and review the Menu Items Available for Salary Packaging.
b) Shared Services Salary Packaging Team

will prepare and distribute salary packaging documentation (Letter of Offer, Salary
Packaging Terms and Conditions, Shared Services Salary Packaging Guidelines) to
potential participants;

will coordinate information sessions re ‘inhouse’ salary packaging services;

will update ‘inhouse’ salary packaging documentation;

will prepare and make salary packaging information available to existing participants;

will commence and update employee salary packaging deductions;

will maintain salary packaging data;

will provide non financial advice on salary packaging;

will prepare and make FBT statements available to participants and Shared Services
Finance;

will make ITC statements available to participants and Shared Services Finance; and

will respond to salary packaging related queries.
c) Directorate

will advise Shared Services of any Directorate specific packaging arrangements;

direct employee enquiries to Shared Services Salary Packaging Team;

will provide each employee wishing to participate in salary packaging with
information on salary packaging in the ACT Public Service, including the ACT Public
Service Salary Packaging Policy and Shared Services Salary Packaging Guidelines; and

PBI agencies will conduct regular audits on employees purchases made on Meal
Entertainment and/or Venue Hire cards.
d) Employee

will familiarise themselves with the ACT Public Service Salary Packaging Policy and
Shared Services Salary Packaging Guidelines;

may seek financial advice from a qualified financial adviser;
 provide the financial adviser with accurate information in order to obtain the best
options for their salary package;
 employees will need to take the Letter of Offer with them to their
financial adviser as proof that the employer has agreed to allow them to
salary package, and the maximum level of salary which is available for
packaging; and get signed the Financial Advice section of the Offer of
Salary Packaging or complete the waiver section.
 will complete the Letter of Offer and forms sent to the employee and provide all
required information;
 where the employee is currently making payroll deductions for benefit items they
intend to salary package, such as insurance premiums, or have other payment
arrangements in place with a financial institution, the employee must take the
appropriate steps to change these arrangements;
 if the employee chooses to salary package a fully novated lease motor vehicle, the
employee should contact a leasing company to ascertain the provisions of the
novated lease and associated finance arrangements;
 if packaging a motor vehicle through a novated lease are responsible for completing
the FBT Declaration in relation to odometer readings and submitting this to the
Shared Services Salary Packaging Team by the nominated date following the end of
each FBT year (31 March);
 once the salary package has commenced, the employee is responsible for notifying
Shared Services Salary Packaging of any changes in the employee’s circumstances,
such as:
a) movement to another part of the ACT Public Service or a statutory office;
b) changed personal circumstances affecting their salary packaging
arrangements;
c) leave without pay;
d) termination of employment under the Public Sector Management Act
1994; and
e) any changes to the employee’s pay that may impact their salary
packaging payments.
 are responsible for all costs associated with their salary packaging, including:
a) salary package payments;
b) all administration fees and charges as outlined in the Shared Services
Salary Packaging Guidelines;
c) any FBT and GST payable (where applicable);
d) any costs associated with obtaining financial advice, however ongoing
costs can be packaged as FBT exempt item via reimbursement; and
e) any other taxes or charges which Government may impose.
6.
GLOSSARY
Agency: means administrative units established under the Public Sector Management
Act 1994, Territory Instrumentality, entities and bodies established under legislation.
Territory owned corporations.
ATO: refers to Australian Taxation Office.
Benefit Item: refers to items available for Salary packaging by the Employee.
Employee: refers to all ACT Public Servants (Directors-General) and Statutory Officers.
Employee Contribution Method: refers to after-tax salary package contributions made
by an employee to reduce the employee’s FBT liability.
Exempt Items: refers to those package items that are exempt from FBT.
FBT: refers to the Fringe Benefits Tax imposed by the Fringe Benefits Tax Assessment
Act.
GST: refers to the tax imposed as Goods and Services Tax by the Goods and Services Tax
Act.
Gross Salary: represents an employee’s cash salary before tax is deducted.
Input Tax Credits: refers to an entitlement arising under the Goods and Services
Tax Act.
Novated Lease: under a novated lease, the employee’s obligations under a finance lease
agreement are transferred (novated) to the employer for the term of the Deed of
Novation.
PBI: means organisations which have the status of a Public Benevolent Institution under
the Fringe Benefits Tax Assessment Act.
Reimbursement: refers to the repayment to an employee of money originally paid out
by the employee for package items, upon receipt of original receipted accounts.
7.
REFERENCES AND LINK
ATO Salary Sacrifice Arrangements
Salary sacrifice arrangements for employees
Shared Services Salary Packaging Guidelines
http://www.sharedservices.act.gov.au/docs/Salary_Packaging_Guidelines.pdf
8.
REVIEW
This policy will be reviewed after three years unless earlier review is required.
9.
APPROVAL AUTHORITY
……………………………………………
(Andrew Cappie-Wood)
Head of Service
Policy Owner
Director
Public Sector Management Group
Workforce Capability and Governance Division
Chief Minister and Treasury
Date: 20 May 2013
………………………………………………..
Date
Attachment A
MENU ITEMS AVAILABLE FOR SALARY PACKAGING
The Head of Service has agreed the following items may be included in salary packaging
arrangements for ACT Public Service employees. It should be noted that this list may be
amended from time to time by the Head of Service without prior notice:
CATEGORY A - Otherwise Deductible Items
(i.e. benefits that would otherwise be tax deductible)

Disability/Income protection insurance premiums;

Financial counselling fees;

Interest payments on an Investment loan;

Membership fees and subscriptions to professional associations (i.e. AIM, AMA,
unions, etc.);

Mobile phones for predominantly business use;

Self education expenses related to the employee’s current employment activities;
and

Work-related travel expenses (not including travel to and from work).
CATEGORY B - Concessionally Taxed and Exempt Items
Exempt items
(i.e. benefits that are exempt from FBT)


Child care fees - ‘in house’ (i.e. employer provided, if available); and
Laptop computers for predominantly business use (i.e. notebook, ipad).
Concessionally taxed items
(i.e. benefits where the full value of the benefit is not subject to FBT)

Contributions to a private superannuation fund (contributions made by the
employer are exempt from FBT and income tax, but are subject to a contributions
tax);

Luxury motor vehicle (for private use) by way of a fully novated lease;

Motor vehicle (for private use) through a fully novated lease;

Replacement vehicle - where an Executive chooses to 'cash-out' the employerprovided motor vehicle the replacement vehicle may be taken as a novated lease
through salary packaging;

Upgrade of an Executive’s employer-provided motor vehicle - where the DirectorsGeneral agrees to allow payments covering the difference between the lease
payments to be made from the Executive’s pre-tax salary through approved salary
packaging arrangements.
CATEGORY C - Full FBT Items
(i.e. benefits subject to the full rate of FBT)

Aged and Disability care payments;

Child care fees - ‘off site’ arrangements;

Insurance premiums, other than income protection (eg. trauma/life, motor vehicle,
home/contents);

Investment loan (eg. real estate property for non-commercial purposes);

Own home mortgage (or private home rental) payments;

Own motor vehicle operating expenses under a novated lease (eg. repairs and
maintenance, vehicle finance/loan payments, registration, insurance, conversions to
enable the use of non-fossil fuels);

Personal investments through a registered managed trust or fund;

Private health insurance premiums;

Private travel (eg. personal holidays, home to work travel, car parking, bus fares,
other modes of transport);

School and higher education fees (including HECS);

Utilities charges (eg. gas, electricity, telephone, water, rates, etc.);

Meal entertainment expenses (and related travel and accommodation costs);

Venue hire expenses.
Note: Bus travel on the ACTION bus network to and from work/school has been removed
from the menu in response to the Federal Government’s announcement on 22 October
2012 concerning the removal of concessional FBT treatment for employer provided fringe
benefits accessed by way of a salary packaging arrangement.
The above categories are in accordance with taxation rules at the date of publication.