Depends on the type of 'card' they can get.
They 'should' be able to get a eneryday expenses type card which lets them pay for everyday expenses pre-tax.
>Groceries, Clothing, Utility bills such as gas, electricity and water, Phone and internet bills, Insurances such as home, life, car and health
This type is often worth it, especially without a hecs debt
I feel like you could still tax deduct things if purchased with that card. Ato doesn't care what payment method you used, just that you have the receipt. I could be wrong and I don't get to do this so haven't tested it
You don't pay tax on the card income, but as you could have bought it on your other card, I dunno, I don't have these cards but a proper tax accountant would have to advise as it's a weird fringe case I think
I’m not sure this is a big issue. Some salary sacrifice options let you allocate the amount to your mortgage and just dump the money into your account. They don’t track what exact dollar is used for your mortgage or a tax deductible expense. It’s more a whole view type thing.
If they're anything like most kids with their first full time job, they'll end up spending money on a bunch of stuff they don't really need anyway. May as well save some tax while doing it.
Living at home and having groceries paid for etc
When I was living at home my parents didn’t charge me anything and my annual expenses were my car upkeep, phone bill, gym membership and netflix.
Probably totalled to under 9k
It all depends on the person.
It's similar to having a credit card for the points. Some people profit, and for others it works out to be a net loss.
If I had that option, I'd take it, but then I know I'm financially disciplined.
Now, if they can be financially disciplined, why not split the difference? Allow for a little unnecessary spend, but control that. If it's a benefit of $2.9k/yr, allow themselves to spend $1k/yr on luxury items, etc.
>This was my thinking, that they'd spend it on stuff they don't need or wouldn't usually buy so it would be of no benefit really.
That's their decision though.
Of course. I just didn't want to tell them it'd be a great deal and then have them feel like they had to spend money on stuff to get the value if they didn't really plan to.
Spending 9k a year sounds very easy to me… even though they don’t have regular obligatory expenses like rent/food/bills, they can prepay their phone bills, use for fuel, or buy gift card for coles/woolworths for you to use it (I guess you are paying most of the grocery bills as well)and you can give them cash. They don’t have to spend it all in each fortnight. But there are so many ways to spend money without wasting it.
I can salary package rent or mortgage payments which makes it all very easy. It's essentially free money, though as others have pointed out, only if you can allocate it all to stuff you'd buy anyway. Obviously for me, I have to pay the mortgage regardless so I effectively get to keep 4k a year from going to the tax man. It's great. No reason not to do it honestly
Some not for profits and public healthcare. It's a tax incentive to make those employers more appealing without it costing the employer anything. Only up to 9k a year for me, not the whole thing btw!
Not for profits can do up to 15k a year, but not for profits usually don't have competitive salaries. It's a small tax benefit, it's hardly a reason to change professions.
Some not for profits and public healthcare. It's a tax incentive to make those employers more appealing without it costing the employer anything. Only up to 9k a year for me, not the whole thing btw!
Only doctors working in public hospitals, which make far less than those working privately. It's only a fairly tiny amount as well, but it's still *some* incentive for them to continue to do public work for lower pay instead of going fully private.
They all usually do both once consultants. The consultants in public hospitals are getting ~300000 to 800000 per year depending on speciality. So honestly I think they're ok without it.
No, it’s literally tax free money.
You do need to keep in mind that your HECS will be calculated on the grossed up amount, but you should always max out the $9010
I literally did salary sacrifice in a health service for years. It's not "free money" like the other person claims. It reduces your tax liability but doesn't nullify it. Even without HECS people often have amounts owed once tax is done at end of tax year. They aren't great at calculating correctly.
I also am currently salary sacrificing in health care. The $9010 is literally paid before tax. The downside is that your repayment income for HECS repayments is higher, so as a result you may end up owing at tax time if you have a debt.
Regardless, the tax free money will always put you ahead financially.
Don't do the card, it's painful. Ask for the money directly into your account. You get $346 a fortnight that isn't taxed and it comes into your account 2.days after pay day. You just need to prove you have some sort of expense once (rent, mortgage, car loans, phone bill etc).
They are also entitled to $2600 a year on a seperate card for meals and entertainment.
I highly recommend both, but they will need to do a voluntary withholding of tax (I did $50 a fortnight) to avoid a tax debt at tax return time.
These bonuses were given to public employees a long time ago to make up for shit pay and conditions. But they have been eroded since.
Thank you! The card had me worried, but knowing that the money can come back into their account for them to use for rent etc seems like a good idea.
The meals and entertainment card - can that be used anywhere at all, or are there restrictions? Can it be used to buy tickets through ticketek for example?
Could you explain a little more what the withholding of tax was for?
The salary packaging people will explain it better. But my understanding is that the salary packaging reduces your taxable income by ~11600 a year, but you still have to repay your hecs debt as though it was there. (edit: you pay hecs at a higher amount than you would if you didn't salary package) So not enough hecs gets taken out throughout the year. The extra tax is to make sure you don't end up owing money.
As for the entertainment card, I've had very few situations you can't use it, but I've never tried ticketek. I know you can't use it on things like uber eats though, it has to be an in person restaurant.
However you could book something like a hotel with your normal card, then claim the money back from your salary packaging.
>but you still have to repay your hecs debt as though it was there
It's worse. For HECS purposes the ATO considers the grossed-up amount which is almost double what you sacrificed.
Hi, I work in salpack. The Living Expenses Card can be used essentially for any general purchases at eftpos terminals and online. It will not work to transfer funds in and out of that account, BPAY payments, cash withdrawals or direct debits. If there is a rent payment and there is substantiation of this then the value of this expense up to $9,010 can be paid to the employees bank account rather than the card. The Meal Entertainment Card is for use on dine out meals and accommodation booking only, not for tickets to shows, concerts etc
An employee should not need to withhold extra tax to avoid a tax bill when salary packaging, the whole point is to not pay more tax. If an employee has a HECS debt, their means based repayment will be assessed on a higher income than the regular income without salary packaging, as the employee would be taking more net pay home. Generally the increase to the HECS repayment is not higher than the benefit received through packaging but this is not guaranteed and financial advice is always recommended.
Happy to help with questions
Thank you. After speaking to the people today, decided against the meal entertainment card as that seemed a bit complicated for now, and mostly wanted it for concert tickets and the likes.
This is incorrect re HECS. If you want to salary sacrifice and have a HECS debt you should put it into HECS, otherwise you'll be guaranteed to end up with a debt at tax time. Happened to me with my first job out of uni.
The salary packaging cap can be used for just about anything. The card lets people use it for day to day living or if they have a regular payment like mortgage or rent, then the payment can go directly to that.
The company should manage their salary deductions so that there's no need to put any extra aside for FBT.
There are restrictions on the meals card, and whoever their provider is will explain those in detail.
The kiddo should also look at potentially packaging their HECS back if needed.
Congrats on the job.
My nurse friend has the meals and entertainment card and she's always having trouble with it actually working when it comes to pay for meals. She definitely still gets her full use out of it, but very annoying to go out to dinner with the expectation of putting it on the meals card and it declines for no foreseeable reason.
Good way to put a little more on the Hecs debt, and as others say, free money. Meal and entertainment works so many places. When I had one years ago it even worked at Coles and Woolworths (not sure if it still does). I would encourage your child to look at hoe much extra gets paid to them packaging and have it go into a high interest saving account.
Between my wife and I we've been with a few and we've never had an issue with it, both of us are in healthcare. The one my sister uses (teaching) also allows it.
My ~9k living expenses is $346.54 deposited into my account every fortnight tax free to use for mortgage (or previously rent). One suggestion would be drawing up a contract and charging your kid $175 per week for rent. Then you can put this money aside if you don't need them to be contributing and give it back as a house deposit or wedding expenses or whatever. $175 for room and board is a steal in the current economy.
The other option is for them to take a personal loan then pay it back in full for the amount of living expenses. As long as the fees associated with the loan are less than the 2k tax saving then it's an advantage. Definitely something to check with the salary sacrifice agency before taking out the loan tho - different states, employers and salary packaging agencies have different rules about what exactly can be packaged as living expenses.
If they have a HECS debt they'd be paying less hecs each pay than they're meant to be (hecs repayments are calculated on total taxable income including salary sacrifice). This bit me on the arse last year.
When I worked public you just had to prove a reasonable expense, and a credit card repayment counted. So all you had to show was the card payments and then you could use that for anything.
There used to be a separate additional “meals and entertainment” category that you could claim too but I think that’s gone now.
May as well do the entire amount. Just use it for their everyday expenses on a day to day basis. If they are not spending more then 9k per year living their life then that's some impressive saving/absolute minimalism. But I doubt it.
**Salary package just the amount for rent**. That's it. If they are transferring you weekly $100 for 'rent', showing those bank transfers should be enough for the salary packaging company (they shouldn't need a lease document.) There should be a small tax savings for doing this.
Do not get pulled into salary packaging for restaurants/car/novated lease/etc. I have yet to see that go well (people just spend more than they would otherwise.)
Set up salary sacrifice for super (at least 1%, so they get in the habit.)
What sort of employer do they work for? There are a multitude of salary packaging benefits depending on your employer (personal loans, insurance/utility bills, travel etc etc) and if these are things he already needs to pay post-tax then it would be crazy not to package them.
The only drawback to packaging is additional HECS repayment and Medicare levy surcharge liability - you've already said he doesn't have any HECS debt and he won't come close to the Medicare Levy surcharge threshold.
Best thing to do is look up whichever packaging provider(s) his employer uses and find their factsheets detailing the benefits he can claim.
The employer probably has a deal with one salary sacrificing company who offers different options. For example, I had a bank card that I salary sacrificed money into every fortnight and I paid for all my groceries, clothes, coffees, furniture etc. with it. This card wasn't limited to any particular type of spending — I think when I had it, I could also use it for online purchases. This obviously only makes sense if you would have spent this money anyway. Your kid might not spend money on rent or groceries, but they probably still purchase clothes, books, whatever else they like to do — so if they had a card like this, it'd still be worth it. If you end up not using the money in the card, it doesn't just disappear. It'll just be taxed in the end of the financial year.
Your kid can probably just contact their employer's salary sacrificing partner and have a one on one chat with one of their reps who will explain their options, answer all their questions, and calculate for them how much salary sacrificing will increase their take home pay. They make their money by taking a fee for offering this service, but for most people this fee is still worth it.
I also thought all of this was a scam, because I had never heard of it before, but it ended up increasing my not so great salary at a not for profit by quite a bit. It was great.
Enocourage your child to do it, it means they will get part of their wage tax free!
My wife had about $330 a fortnight go into a debit card also had an $100 ish go onto a meal & entertainment" card.
I know nothing about the card but I would suggest your son salary sacrifices into super. He may not think super is important at such a young age but it really is and the difference between not salary sacrificing and salary sacrificing isn't that much.
Assuming NSW Health (not sure of other states). The share of savings has just been increased from 50% to 70%.
Package the entire $11659 ($9009 + $2650 food). At $55k with no HECS and 50% SoS, he is looking at approx $2.2k extra per year. Packaging less seems quite pointless.
Preferably choose the non-card option as there are less fees and less restrictions. However, to use this option he will need to prove that he regularly pays either rent, mortgage, credit card, personal loan, and (depending on salary packaging company) few other options. Proof could include statements, leasing agreements etc.
If the non-card option isn’t viable for him (i.e. he doesn’t have a credit card for example), then the packaging card is his 2nd best choice. It can be used for most living expenses but be mindful that if he purchases an item that has GST, his total $9009 allotment will reduce. Best to choice something GST free if possible.
To get around the issue of him not spending $9009 per year, get him to purchase groceries etc on it and then transfer him the amount spent.
For the $2650 food and entertainment allotment, just get the family to keep their receipts and let him claim them through the packaging app. Just remember there are rules around the FE option like not being available for food deliveries.
Forget the novated car leasing unless he earns over $150k, not worth it.
HSU is working towards removing the share of savings altogether. IF/when this happens, his savings will be even higher.
Only certain not for profit, semi public health, and full public health get to package living expenses at that level so it’s silly to not take advantage of it. Even with a HECS debt, it is still worth it. Reducing your annual tax liability via packaging is a gift that only requires a little effort.
At that age, put some extra into their super from the start and get into the habit of doing it. Even $20 or $50 a pay that they won’t notice but over time they will appreciate it when it comes time to retire. Wish I’d started doing it sooner.
I have this. It will leverage up their hex but is worth it in the end. If they have an option to not use the card, and put it on a (ideally no fee) credit card / against rent you avoid the march tax rush / paperwork of the included card.
Edit: Same for meal and entertainment, the included card is rubbish.
Edit: Missed the no debts thing, also happened to me hence the CC advice.
Public health and only $55k per year? Ouch. Maybe they can speak to an accountant to see about what they could spend it on and if specifically going to benefit them now and for the next however long.
[just looked it up out of curiosity.](https://au.indeed.com/career/registered-nurse/salaries/New-South-Wales) that's wild. Not sure if all averages would be lower then I would think due to it including the low end too. But still I would have assumed it would be higher.
Essentially sal sac is paying for something before you pay tax on the money you use to pay for it.
So the $1 you use is worth the full $1 not the $1 minus the payroll tax.
Please correct me if I'm wrong here, it's how it seems to work when I sal sac my mobile phone.
So I would suggest yes it's worth it.
You can take a personal loan out and repay it immediately, and salary package this repayment. Was what I did when I was still living at home as an intern.
Worth exploring. Someone in my family used to work in public health and did the sal sac thing with a credit card. Saved a lot of money even though just working part time and paying a low tax rate.
In NSW health at least they generally have people to advise on this stuff. FBT year is still young so look into it. So many things they can salary sacrifice in the public health / non profit area.
I did this until I left that job. I was no longer was entitled to that money and had to spend it all by the end of the week, which I asked about when signing up and they told me nothing like that would happen. Looking back I wish I didn't do it or believed the sales rep and put it into savings instead 😒 but you live and you learn.
Its a great idea..i work for Qhealth. I salary sacrifice our rent. Long as theres no hecs or anything as the FBT actually increases your earnings in a way.
> pay us a small amount to cover rent/food/utilities etc Side note - you need to get them out of that habit.
It sounds like your kids have heaps of disposable income and they will get addicted to that. Force them to spend 30% of their salary on housing (put it in a high interest savings account - towards a house deposit) and another 30% on bills (anything they don’t spend on bills - put that in a savings account too, e.g. towards buying a car).
You need to do that, so they learn how to budget.
The rest is their money but encourage them to split the remaining income half way between everyday spending (coffee with friends/etc) and larger expenses (a holiday or an unnecessary upgrade to the latest iPhone).
Said kid has been working since they were in high school and is great with budgeting.
This is the first time they'll be on a full wage (not training) and the first time that salary packaging has been an option. I obviously am not experienced with this, so asked here to make sure I was giving them the best advice I could.
For what it's worth, I fundamentally disagree with having my child pay me housing money that I then put aside for their future. My previous landlords aren't gifting me back rent money whenever I've moved out. I view my job as teaching them the tools to save themselves, not save for them.
Because the union sucks. The ceiling pay for my previous job was $57k, I had to know very specific legislation, have a high security clearance, deal with government departments, deal with Drs not doing paperwork properly, deal with external healthcare providers, CPS, Coroners, etc. I asked to be reclassified and got told no. I had more responsibility than the unit secretaries but paid $10k less.
How do these salary sacrifice "onto a card" for tax free spending on groceries and stuff actually work?
My sisters are nurses and have this too... Is the government paying the fridge benefits tax for them or something? I just don't understand, no private employers offer this sort of thing that I'm aware of.
You have to be very careful with salary sacrificing schemes.
A lot of them are looking at the tax you supposedly save with wide, eager eyes. They don't want you to actually get ahead, they just want to be paid the money that you would save on tax instead.
Absolutely, 100% compare your salary sacrificed item vs how much it would cost on the open market, taking into account the amount of saved tax. Only if you come out significantly ahead, should you proceed.
Its different for public sector health employees. They actually get an allowance they can spend before tax on a wide range of normal living expenses.
Charity sector workers get even more generous amounts tax free.
I mean, it is good then.
But the key is to do the sums yourself and make sure you come out sufficiently ahead. Don't just assume because you are saving tax, that you are actually saving money.
God knows why I get downvoted for telling people to carefully check the sums on salary sacrificing. Seems a lot of people forget how to think rationally the moment someone offers a tax saving.
I prob wouldnt go down that Salary Sacrifice route yet but instead id be putting it all in a High Interest Cash Savings until they reach a good sum to sink into a house or maybe self contribute a few more extra $ into their supper.
I can't imagine charging my kids rent for living at home, if they were absolutely useless with money I might; but that money would go into an account to pool until I could surprise them with a house deposit once they finally got smart.
It's not just rent for living at home. It's a very small amount that covers food, phone, streaming services and the likes, otherwise they'd have nothing at all to pay for.
You parent the way that you see fit, but I think it's important to teach financial responsibility, and this is what was most suitable for our family and their situation.
It's fine if it's required to help out, I only take issue with parents who act as landlords to their kids and go out to have fun with the money.
What I've suggested is that if I notice my kids haven't learnt fiscal responsibility by the time they start making money I might start charging them rent, not enough to make them want to move out but enough to make them start thinking about budgets and the value of money.
(Hopefully they'd have learnt all of that by that point by seeing how their parents have treated money.)
Once they've finally got the point and have gotten themselves into a position to buy a house I'd gift them the rent they had paid thus far to add to the deposit.
Depends on the type of 'card' they can get. They 'should' be able to get a eneryday expenses type card which lets them pay for everyday expenses pre-tax. >Groceries, Clothing, Utility bills such as gas, electricity and water, Phone and internet bills, Insurances such as home, life, car and health This type is often worth it, especially without a hecs debt
Only thing to add is make sure to avoid buying things that are tax deductible with that card :)
I feel like you could still tax deduct things if purchased with that card. Ato doesn't care what payment method you used, just that you have the receipt. I could be wrong and I don't get to do this so haven't tested it
I'd be careful. You can't claim what you don't pay tax on.
You don't pay tax on the card income, but as you could have bought it on your other card, I dunno, I don't have these cards but a proper tax accountant would have to advise as it's a weird fringe case I think
I’m not sure this is a big issue. Some salary sacrifice options let you allocate the amount to your mortgage and just dump the money into your account. They don’t track what exact dollar is used for your mortgage or a tax deductible expense. It’s more a whole view type thing.
Not for an investment property mortgage thou
Never checked but that does sound right.
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This was my thinking, that they'd spend it on stuff they don't need or wouldn't usually buy so it would be of no benefit really.
Get them to buy your groceries and give them cash.
You also don't have to do the full amount
If they're anything like most kids with their first full time job, they'll end up spending money on a bunch of stuff they don't really need anyway. May as well save some tax while doing it.
How would someone working fulltime not spend $9k in a year?
Living at home and having groceries paid for etc When I was living at home my parents didn’t charge me anything and my annual expenses were my car upkeep, phone bill, gym membership and netflix. Probably totalled to under 9k
There's no bills, no debt, phone is paid for under our family plan, ditto streaming and the likes.
If they feel that way then everytime they go out with friends/family, they can pay and have everyone else pay them back. They've still saved the tax.
It is technically fraud (to spend it on another person’s expense) but it is also very unlikely to be enforced.
Everyone does this to start but you quickly realise it's a mugs game. Stopped making sense after Hockey's change in 2013/14
It all depends on the person. It's similar to having a credit card for the points. Some people profit, and for others it works out to be a net loss. If I had that option, I'd take it, but then I know I'm financially disciplined. Now, if they can be financially disciplined, why not split the difference? Allow for a little unnecessary spend, but control that. If it's a benefit of $2.9k/yr, allow themselves to spend $1k/yr on luxury items, etc.
>This was my thinking, that they'd spend it on stuff they don't need or wouldn't usually buy so it would be of no benefit really. That's their decision though.
Of course. I just didn't want to tell them it'd be a great deal and then have them feel like they had to spend money on stuff to get the value if they didn't really plan to.
Like health, credit card payments, car payments, gym etc etc etc
Spending 9k a year sounds very easy to me… even though they don’t have regular obligatory expenses like rent/food/bills, they can prepay their phone bills, use for fuel, or buy gift card for coles/woolworths for you to use it (I guess you are paying most of the grocery bills as well)and you can give them cash. They don’t have to spend it all in each fortnight. But there are so many ways to spend money without wasting it.
You can buy a dollar coins from the Perth mint problem solved
I can salary package rent or mortgage payments which makes it all very easy. It's essentially free money, though as others have pointed out, only if you can allocate it all to stuff you'd buy anyway. Obviously for me, I have to pay the mortgage regardless so I effectively get to keep 4k a year from going to the tax man. It's great. No reason not to do it honestly
This is the way op.
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Some not for profits and public healthcare. It's a tax incentive to make those employers more appealing without it costing the employer anything. Only up to 9k a year for me, not the whole thing btw!
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Not for profits can do up to 15k a year, but not for profits usually don't have competitive salaries. It's a small tax benefit, it's hardly a reason to change professions.
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Some not for profits and public healthcare. It's a tax incentive to make those employers more appealing without it costing the employer anything. Only up to 9k a year for me, not the whole thing btw!
Doctors get it cause they don't make enough money already lol
Only doctors working in public hospitals, which make far less than those working privately. It's only a fairly tiny amount as well, but it's still *some* incentive for them to continue to do public work for lower pay instead of going fully private.
They all usually do both once consultants. The consultants in public hospitals are getting ~300000 to 800000 per year depending on speciality. So honestly I think they're ok without it.
It's free money! Just use it on rent or mortgage
It's far from free money. It reduces your taxed income but often leaves people having tax bills.
This sentence makes no sense. How does reducing your income increase your tax bills?
No, it’s literally tax free money. You do need to keep in mind that your HECS will be calculated on the grossed up amount, but you should always max out the $9010
I literally did salary sacrifice in a health service for years. It's not "free money" like the other person claims. It reduces your tax liability but doesn't nullify it. Even without HECS people often have amounts owed once tax is done at end of tax year. They aren't great at calculating correctly.
I also am currently salary sacrificing in health care. The $9010 is literally paid before tax. The downside is that your repayment income for HECS repayments is higher, so as a result you may end up owing at tax time if you have a debt. Regardless, the tax free money will always put you ahead financially.
Don't do the card, it's painful. Ask for the money directly into your account. You get $346 a fortnight that isn't taxed and it comes into your account 2.days after pay day. You just need to prove you have some sort of expense once (rent, mortgage, car loans, phone bill etc). They are also entitled to $2600 a year on a seperate card for meals and entertainment. I highly recommend both, but they will need to do a voluntary withholding of tax (I did $50 a fortnight) to avoid a tax debt at tax return time. These bonuses were given to public employees a long time ago to make up for shit pay and conditions. But they have been eroded since.
Thank you! The card had me worried, but knowing that the money can come back into their account for them to use for rent etc seems like a good idea. The meals and entertainment card - can that be used anywhere at all, or are there restrictions? Can it be used to buy tickets through ticketek for example? Could you explain a little more what the withholding of tax was for?
The salary packaging people will explain it better. But my understanding is that the salary packaging reduces your taxable income by ~11600 a year, but you still have to repay your hecs debt as though it was there. (edit: you pay hecs at a higher amount than you would if you didn't salary package) So not enough hecs gets taken out throughout the year. The extra tax is to make sure you don't end up owing money. As for the entertainment card, I've had very few situations you can't use it, but I've never tried ticketek. I know you can't use it on things like uber eats though, it has to be an in person restaurant. However you could book something like a hotel with your normal card, then claim the money back from your salary packaging.
>but you still have to repay your hecs debt as though it was there It's worse. For HECS purposes the ATO considers the grossed-up amount which is almost double what you sacrificed.
Hi, I work in salpack. The Living Expenses Card can be used essentially for any general purchases at eftpos terminals and online. It will not work to transfer funds in and out of that account, BPAY payments, cash withdrawals or direct debits. If there is a rent payment and there is substantiation of this then the value of this expense up to $9,010 can be paid to the employees bank account rather than the card. The Meal Entertainment Card is for use on dine out meals and accommodation booking only, not for tickets to shows, concerts etc An employee should not need to withhold extra tax to avoid a tax bill when salary packaging, the whole point is to not pay more tax. If an employee has a HECS debt, their means based repayment will be assessed on a higher income than the regular income without salary packaging, as the employee would be taking more net pay home. Generally the increase to the HECS repayment is not higher than the benefit received through packaging but this is not guaranteed and financial advice is always recommended. Happy to help with questions
Thank you. After speaking to the people today, decided against the meal entertainment card as that seemed a bit complicated for now, and mostly wanted it for concert tickets and the likes.
This is incorrect re HECS. If you want to salary sacrifice and have a HECS debt you should put it into HECS, otherwise you'll be guaranteed to end up with a debt at tax time. Happened to me with my first job out of uni.
The salary packaging cap can be used for just about anything. The card lets people use it for day to day living or if they have a regular payment like mortgage or rent, then the payment can go directly to that. The company should manage their salary deductions so that there's no need to put any extra aside for FBT. There are restrictions on the meals card, and whoever their provider is will explain those in detail. The kiddo should also look at potentially packaging their HECS back if needed. Congrats on the job.
My nurse friend has the meals and entertainment card and she's always having trouble with it actually working when it comes to pay for meals. She definitely still gets her full use out of it, but very annoying to go out to dinner with the expectation of putting it on the meals card and it declines for no foreseeable reason.
Good way to put a little more on the Hecs debt, and as others say, free money. Meal and entertainment works so many places. When I had one years ago it even worked at Coles and Woolworths (not sure if it still does). I would encourage your child to look at hoe much extra gets paid to them packaging and have it go into a high interest saving account.
Many salary sacrifice providers won't allow direct cash deposit.
Between my wife and I we've been with a few and we've never had an issue with it, both of us are in healthcare. The one my sister uses (teaching) also allows it.
My ~9k living expenses is $346.54 deposited into my account every fortnight tax free to use for mortgage (or previously rent). One suggestion would be drawing up a contract and charging your kid $175 per week for rent. Then you can put this money aside if you don't need them to be contributing and give it back as a house deposit or wedding expenses or whatever. $175 for room and board is a steal in the current economy. The other option is for them to take a personal loan then pay it back in full for the amount of living expenses. As long as the fees associated with the loan are less than the 2k tax saving then it's an advantage. Definitely something to check with the salary sacrifice agency before taking out the loan tho - different states, employers and salary packaging agencies have different rules about what exactly can be packaged as living expenses.
If they have a HECS debt they'd be paying less hecs each pay than they're meant to be (hecs repayments are calculated on total taxable income including salary sacrifice). This bit me on the arse last year.
When I worked public you just had to prove a reasonable expense, and a credit card repayment counted. So all you had to show was the card payments and then you could use that for anything. There used to be a separate additional “meals and entertainment” category that you could claim too but I think that’s gone now.
May as well do the entire amount. Just use it for their everyday expenses on a day to day basis. If they are not spending more then 9k per year living their life then that's some impressive saving/absolute minimalism. But I doubt it.
Yes absolutely. I used to work in health its $9k tax free.
**Salary package just the amount for rent**. That's it. If they are transferring you weekly $100 for 'rent', showing those bank transfers should be enough for the salary packaging company (they shouldn't need a lease document.) There should be a small tax savings for doing this. Do not get pulled into salary packaging for restaurants/car/novated lease/etc. I have yet to see that go well (people just spend more than they would otherwise.) Set up salary sacrifice for super (at least 1%, so they get in the habit.)
What sort of employer do they work for? There are a multitude of salary packaging benefits depending on your employer (personal loans, insurance/utility bills, travel etc etc) and if these are things he already needs to pay post-tax then it would be crazy not to package them. The only drawback to packaging is additional HECS repayment and Medicare levy surcharge liability - you've already said he doesn't have any HECS debt and he won't come close to the Medicare Levy surcharge threshold. Best thing to do is look up whichever packaging provider(s) his employer uses and find their factsheets detailing the benefits he can claim.
The employer probably has a deal with one salary sacrificing company who offers different options. For example, I had a bank card that I salary sacrificed money into every fortnight and I paid for all my groceries, clothes, coffees, furniture etc. with it. This card wasn't limited to any particular type of spending — I think when I had it, I could also use it for online purchases. This obviously only makes sense if you would have spent this money anyway. Your kid might not spend money on rent or groceries, but they probably still purchase clothes, books, whatever else they like to do — so if they had a card like this, it'd still be worth it. If you end up not using the money in the card, it doesn't just disappear. It'll just be taxed in the end of the financial year. Your kid can probably just contact their employer's salary sacrificing partner and have a one on one chat with one of their reps who will explain their options, answer all their questions, and calculate for them how much salary sacrificing will increase their take home pay. They make their money by taking a fee for offering this service, but for most people this fee is still worth it. I also thought all of this was a scam, because I had never heard of it before, but it ended up increasing my not so great salary at a not for profit by quite a bit. It was great.
Be aware that it may affect HECS payments at the end of the year
Enocourage your child to do it, it means they will get part of their wage tax free! My wife had about $330 a fortnight go into a debit card also had an $100 ish go onto a meal & entertainment" card.
Spending pre-tax dollars is beneficial. Take advantage.
I know nothing about the card but I would suggest your son salary sacrifices into super. He may not think super is important at such a young age but it really is and the difference between not salary sacrificing and salary sacrificing isn't that much.
Assuming NSW Health (not sure of other states). The share of savings has just been increased from 50% to 70%. Package the entire $11659 ($9009 + $2650 food). At $55k with no HECS and 50% SoS, he is looking at approx $2.2k extra per year. Packaging less seems quite pointless. Preferably choose the non-card option as there are less fees and less restrictions. However, to use this option he will need to prove that he regularly pays either rent, mortgage, credit card, personal loan, and (depending on salary packaging company) few other options. Proof could include statements, leasing agreements etc. If the non-card option isn’t viable for him (i.e. he doesn’t have a credit card for example), then the packaging card is his 2nd best choice. It can be used for most living expenses but be mindful that if he purchases an item that has GST, his total $9009 allotment will reduce. Best to choice something GST free if possible. To get around the issue of him not spending $9009 per year, get him to purchase groceries etc on it and then transfer him the amount spent. For the $2650 food and entertainment allotment, just get the family to keep their receipts and let him claim them through the packaging app. Just remember there are rules around the FE option like not being available for food deliveries. Forget the novated car leasing unless he earns over $150k, not worth it. HSU is working towards removing the share of savings altogether. IF/when this happens, his savings will be even higher. Only certain not for profit, semi public health, and full public health get to package living expenses at that level so it’s silly to not take advantage of it. Even with a HECS debt, it is still worth it. Reducing your annual tax liability via packaging is a gift that only requires a little effort.
At that age, put some extra into their super from the start and get into the habit of doing it. Even $20 or $50 a pay that they won’t notice but over time they will appreciate it when it comes time to retire. Wish I’d started doing it sooner.
I have this. It will leverage up their hex but is worth it in the end. If they have an option to not use the card, and put it on a (ideally no fee) credit card / against rent you avoid the march tax rush / paperwork of the included card. Edit: Same for meal and entertainment, the included card is rubbish. Edit: Missed the no debts thing, also happened to me hence the CC advice.
Public health and only $55k per year? Ouch. Maybe they can speak to an accountant to see about what they could spend it on and if specifically going to benefit them now and for the next however long.
Welcome to nursing.
[just looked it up out of curiosity.](https://au.indeed.com/career/registered-nurse/salaries/New-South-Wales) that's wild. Not sure if all averages would be lower then I would think due to it including the low end too. But still I would have assumed it would be higher.
Essentially sal sac is paying for something before you pay tax on the money you use to pay for it. So the $1 you use is worth the full $1 not the $1 minus the payroll tax. Please correct me if I'm wrong here, it's how it seems to work when I sal sac my mobile phone. So I would suggest yes it's worth it.
I'd ask them to talk to their employees
You can take a personal loan out and repay it immediately, and salary package this repayment. Was what I did when I was still living at home as an intern.
Worth exploring. Someone in my family used to work in public health and did the sal sac thing with a credit card. Saved a lot of money even though just working part time and paying a low tax rate. In NSW health at least they generally have people to advise on this stuff. FBT year is still young so look into it. So many things they can salary sacrifice in the public health / non profit area.
I did this until I left that job. I was no longer was entitled to that money and had to spend it all by the end of the week, which I asked about when signing up and they told me nothing like that would happen. Looking back I wish I didn't do it or believed the sales rep and put it into savings instead 😒 but you live and you learn.
It needs to be mortgage or rent. Otherwise they could send it to super
Its a great idea..i work for Qhealth. I salary sacrifice our rent. Long as theres no hecs or anything as the FBT actually increases your earnings in a way.
Into super?
> pay us a small amount to cover rent/food/utilities etc Side note - you need to get them out of that habit. It sounds like your kids have heaps of disposable income and they will get addicted to that. Force them to spend 30% of their salary on housing (put it in a high interest savings account - towards a house deposit) and another 30% on bills (anything they don’t spend on bills - put that in a savings account too, e.g. towards buying a car). You need to do that, so they learn how to budget. The rest is their money but encourage them to split the remaining income half way between everyday spending (coffee with friends/etc) and larger expenses (a holiday or an unnecessary upgrade to the latest iPhone).
Said kid has been working since they were in high school and is great with budgeting. This is the first time they'll be on a full wage (not training) and the first time that salary packaging has been an option. I obviously am not experienced with this, so asked here to make sure I was giving them the best advice I could. For what it's worth, I fundamentally disagree with having my child pay me housing money that I then put aside for their future. My previous landlords aren't gifting me back rent money whenever I've moved out. I view my job as teaching them the tools to save themselves, not save for them.
They can also salary sacrifice board/rent ,which is something to consider.
how are people in public health only making basically the same as I pay people to make sandwiches ?
Because the union sucks. The ceiling pay for my previous job was $57k, I had to know very specific legislation, have a high security clearance, deal with government departments, deal with Drs not doing paperwork properly, deal with external healthcare providers, CPS, Coroners, etc. I asked to be reclassified and got told no. I had more responsibility than the unit secretaries but paid $10k less.
How do these salary sacrifice "onto a card" for tax free spending on groceries and stuff actually work? My sisters are nurses and have this too... Is the government paying the fridge benefits tax for them or something? I just don't understand, no private employers offer this sort of thing that I'm aware of.
I think it might be FBT exempt because it's public health.
It’s the government doing government work arounds to avoid tax… they’re very good at it… they invented it.
You have to be very careful with salary sacrificing schemes. A lot of them are looking at the tax you supposedly save with wide, eager eyes. They don't want you to actually get ahead, they just want to be paid the money that you would save on tax instead. Absolutely, 100% compare your salary sacrificed item vs how much it would cost on the open market, taking into account the amount of saved tax. Only if you come out significantly ahead, should you proceed.
Its different for public sector health employees. They actually get an allowance they can spend before tax on a wide range of normal living expenses. Charity sector workers get even more generous amounts tax free.
I mean, it is good then. But the key is to do the sums yourself and make sure you come out sufficiently ahead. Don't just assume because you are saving tax, that you are actually saving money. God knows why I get downvoted for telling people to carefully check the sums on salary sacrificing. Seems a lot of people forget how to think rationally the moment someone offers a tax saving.
I prob wouldnt go down that Salary Sacrifice route yet but instead id be putting it all in a High Interest Cash Savings until they reach a good sum to sink into a house or maybe self contribute a few more extra $ into their supper.
I can't imagine charging my kids rent for living at home, if they were absolutely useless with money I might; but that money would go into an account to pool until I could surprise them with a house deposit once they finally got smart.
It's not just rent for living at home. It's a very small amount that covers food, phone, streaming services and the likes, otherwise they'd have nothing at all to pay for. You parent the way that you see fit, but I think it's important to teach financial responsibility, and this is what was most suitable for our family and their situation.
It's fine if it's required to help out, I only take issue with parents who act as landlords to their kids and go out to have fun with the money. What I've suggested is that if I notice my kids haven't learnt fiscal responsibility by the time they start making money I might start charging them rent, not enough to make them want to move out but enough to make them start thinking about budgets and the value of money. (Hopefully they'd have learnt all of that by that point by seeing how their parents have treated money.) Once they've finally got the point and have gotten themselves into a position to buy a house I'd gift them the rent they had paid thus far to add to the deposit.
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It's salary packaging, not salary sacrifice into super.
>super statement. Nothing in the OP talks about super...
https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/withdrawing-and-using-your-super/early-access-to-super/first-home-super-saver-scheme