SALARY PACKAGING – “In-House” Benefits
Guide to Employees
Introduction
Under the “In-House” benefits arrangement, University of Queensland employees
who make certain purchases of goods and services provided by the University, may
elect to salary package these costs. At present, this arrangement is limited to
UQconnect internet services via payroll deduction, but will later be extended to
purchases from UQ Bookshop/ UQ Press and possibly to other relevant agencies.
The maximum combined amount of “In-House” benefits allowable for salary
packaging will be $666 in any fringe benefits tax year (1 April- 31 March) and is
inclusive of GST. The maximum amount for salary packaging as an “In-House”
benefit has been determined with reference to Australian Taxation Office legislation,
which exempts payment of Fringe Benefits Tax (FBT) up to this limit.
What is available as an “In- House” benefit?
The Australian Taxation Office under “In-House” benefit guidelines allows this
arrangement to apply to the purchase of good and services that are normally offered
for sale to the public in the ordinary course of business by the employer.
Staff must seek their own independent financial advice before salary packaging “InHouse” benefits.
About UQconnect
UQconnect is the University’s own Internet Service Provider, and provides a range of
Internet products for staff that can be salary packaged. You can elect to salary
package:
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Dial Up Internet
ADSL Broadband
Static IP
You can visit a UQconnect Service Centre at St. Lucia, Ipswich and Gatton campuses
or for further information please visit www.uqconnect.net/staff
Benefits of Salary Packaging
The benefits from salary packaging relate to the saving of PAYG taxation. Under the
In-house benefit salary package arrangement, the value of goods and services
purchased (up to the maximum amount allowable) will be transacted via the
employee’s fortnightly payroll to give the employee the PAYG tax concession. The
amount of savings is dictated by individual marginal tax rates and personal taxation
situation.
The following example details expected tax savings based on marginal tax rates and
annual gross income.
ATO Marginal Tax Rates as
at 1/7/2005
(Including Medicare levy)
In-House
Benefits
(Maximum
Amount)
1/7/2005 Rates
PAYG Saving
$
$
$
0 to 6000
0%
666
NIL + MCL
0
6001 to 21600 16.5 %
666
15% + MCL
109.00
21601 to 63000 31.5%
666
30% + MCL
209.00
63001 to 95000 43.5%
666
42% + MCL
289.00
Greater than 95000
666
47% + MCL
323.00
48.5%
This table is intended as a guide only, other factors such as your existing salary
packaging arrangements and personal tax situation may impact on any tax benefit.
GST concessions will not apply to UQconnect fortnightly salary packaged payroll
deductions.
Eligibility
As with any University of Queensland salary package arrangement, to participate the
staff member must be a current full time or part time employee of the University
(casual employees are not eligible). The combined amount of all salary packaging
arrangements must not exceed 50% of the employee’s gross base salary.
Participation in salary packaging is voluntary and employees are free to choose those
benefits that best suit their individual needs.
Procedure
Fortnightly payroll deduction
Employees wishing to salary package fortnightly payroll deductions for UQconnect
services will fall within 2 groups:
1. Employees who have a current payroll deduction and wish to convert to
the salary package arrangement must complete the authority form
available from :
http://www.uq.edu.au/current-staff/index.html?page=10571&pid=10555
Instructions:
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The authority form must be printed, signed by the staff member then
sent to Employee Benefits Section, HR Division for final approval.
Employee Benefits Section will amend the current payroll deduction to
indicate that it is part of a salary package arrangement
This authority will remain in place until such time that it is cancelled
by the employee or the University
2. Employees who have not previously applied for an Internet service
through UQconnect, must apply to use their services.
Instructions:
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Visit the UQconnect staff website www.uqconnect.net/staff and apply
for the product you wish to salary package.
Advise Employee Benefits Section that you wish to participate in the
“In-House” salary package arrangement by completing the salary
packaging authority form available at:
http://www.uq.edu.au/current-staff/index.html?page=10571&pid=10555
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The authority form must be printed, signed by the staff member then
sent to Employee Benefits Section, HR Division for final approval.
Employee Benefits Section will ensure (once advised by UQconnect)
that the new payroll deduction is part of a salary package agreement.
This authority will remain in place until such time that it is cancelled
by the staff member or the University
Please note these salary packaged payroll deductions will be monitored. Should the
accumulated amount of transactions, across all “in-house” salary packaging
arrangements, exceed the $666 maximum allowable (in an FBT year 1 April to 31
March, then, the payroll deduction will revert to the standard (post-tax)
arrangement for the remainder of the FBT year..
Unless otherwise advised, the salary packaged payroll arrangement will
automatically recommence at the start of the next FBT year.
Reimbursement Conditions
Employees using the UQconnect salary packaged payroll deduction arrangement will
receive PAYG concessions on a fortnightly basis.
Ceasing Employment
When ceasing employment, the employee should contact UQconnect to make any
alternative arrangements for payment of their internet service.
Fees and Charges
The University applies an administration fee totalling 2% of salary packaged “InHouse” benefit items. This is included in the pre-tax component of the salary package
arrangement and will be included in the $666 maximum amount allowable from the
purchase of goods and services as In-House benefits.
Taxation Issues
The In-house benefit arrangement is allowed by the ATO and concessions from fringe
benefits tax are determined by the ATO and are subject to change at any time.
Goods and services purchased under the salary packaging arrangement cannot
be claimed as a deductible item for income tax purposes.
Frequently Asked Questions
Is salary packaging viable if I am on a low income?
The amount of PAYG tax savings would depend on your marginal tax rate.
What happens if I spend more than is allowed under the arrangement?
The value of goods and services purchased during the FBT year will be totalled prior
to the end of the FBT year and this amount up to a maximum of $666 (GST Inclusive)
will be included in the salary package arrangement. Any additional amounts will not
be included in the salary package arrangement and there will be no PAYG tax
concessions on the excess amount.
Can I carry over the amount to the next FBT year?
No. The new FBT year will commence on the 1st April and will only include
purchases of goods and services made from that date.