The changes to personal tax rates announced in the May Federal Budget can provide an increase in savings for employees who salary package a motor vehicle, according to the Executive Director of the salary packaging firm “Selectus”.
Jim McNeilly of Selectus, found that after a careful review of the budget it provided some good news in regards to salary packaging. “Salary packaging is a fantastic benefit for employees as it reduces the cost of running their personal vehicle” say McNeilly, “and the Federal Budget has increased employee savings even higher. The changes to personal income tax rates for 2012/2013, which start on the 1st of July, mean that employees may receive an increase to their net annual benefit of their salary packaged motor vehicle.”
Salary packaging of motor vehicles has grown rapidly as employers from all industry sectors understand what it means in helping to reduce an employee’s cost of living and making the purchasing of their personal motor vehicle and vehicle operating costs more affordable.
McNeilly explains the savings further.
“Let’s consider an employee who earns $80,000 taxable income and travels 20,000 kilometres per year and wants to salary package a family sedan costing $40,000, together with all the running costs on a 4 year lease," Mr McNeilly said.
"As a result of salary packaging their vehicle, this employee would normally have an extra $4,060 net in their hand per annum, when compared to them paying the same costs from their after tax salary. With the income tax rate changes the savings will now increase to $4,366 per annum. The additional annual net benefit of $306 represents a 7.5% net annual benefit increase.
"It’s nice to know that the costs of some expenses are actually going down and not up!"
With over 15 years’ experience, Selectus is a leading provider of salary packaging administration and fleet services to Employers and Employees. We have a successful record of managing all aspects of salary packaging for geographically diverse clients, while achieving our goal of making salary packaging as easy as possible for Employees to enjoy with minimum Employer involvement.
P: 0411 883 296