This post will share my findings on the major benefits of Maxxia, a salary packaging provider in Australia. As you read through, you will learn how the majority of the customers have felt about their product and service. Plus, you will see how people’s interest in their brand has changed over the past 5 years, which is a good indicator of the quality of their service. Let’s first find out about the firm.
Maxxia is the largest employee benefits provider in Australia according to its website. The firm started the salary packaging service since 1988 and continuously grew as a well-known salary package provider. Maxxia is part of McMillan Shakespeare Group (ASX-listed). The firm has been able to maintain good relationships with government agencies, health organisations, charities, and private businesses. The website explains that Maxxis is the only salary packaging provider to the Government of South Australia. In addition to salary packaging, Maxxia provides more including novated leasing and extended benefits.
Major Maxxia Benefits
To understand and use the Maxxia service, we need to understand what they offer. There are three major services they provide:
- Salary packaging
- Novated leasing
People would have general knowledge about insurance. For those who may not be familiar with salary packaging and novated leasing, I wrote some explanations right below.
What is Salary Packaging (or Salary Sacrifice)
Salary packaging is not a unique feature of Maxxia, but a wide-spread financial term you can find in Australia. However, It does not mean everyone can enjoy the benefits of SP. According to ASIC (Australian Securities & Investments Commission), SP is an agreement with your employer where you can purchase goods and services using your pre-tax salary. For example, you can salary package certain items such as computers, cars, childcare, and super. This will allow you to reduce taxable income and save more money. One important fact is that you cannot use SP for the purchases that have already made. If you use salary packaging wisely, you can save money by paying less tax.
What is Novated Leasing (or Car Lease)
According to Maxxia’s explanation, a novated lease is a type of employee benefits that your employer leases a car on your behalf. Novated leasing is a three-party agreement among your employer, a financier, and you. The agreement can last anywhere from one to five years. In most cases, you are allowed to choose the car you want regardless of brand, type, new or used, or even your current car. The essence of the program is similar to salary packaging.
Your employer takes some money out of your salary to pay for your car and its running costs. The taken-out money is tax-free, which means that you don’t have to pay the PAYG (Pay-As-You-Go) tax on that amount in the financial year. This means that you can get more money out of your salary and less tax payment. But, please note that this does not mean that the benefit is entirely tax-free.
There is a separate tax called Fringe Benefits Tax (FBT) – a tax applied to benefits you receive from your employer that are NOT in the form of cash salary or wages. A novated lease is in this category, thus, FBT will be applied. As a tip to offset FBT, Maxxia points out that you may be liable to pay on your novated lease by setting up some portion of your post-tax salary as deductions. This is called the Employee Contribution Method (ECM). Using the ECM, you can reduce the tax payment for your car, and that reduces the FBT payable to zero.
Maxxia Salary Packages
We have learned the background of Maxxia and the concept of salary packaging and novated leasing. In this section, we will go deeper and find out what items you can salary package with Maxxia.
Depending on the level of your salary, it could be beneficial for you to put some of your pre-tax income into your superannuation. It is good for you and your employer since the extra contribution will be taxed by the super fund at 15% which is the same as your employer’s contributions. Scott Pape, the author of Barefoot Investor, also encourages you to keep your super contribution at 15%.
On his blog post, Increase Your Super to 15 Percent, he explains that the 15 percent super strategy has been proven to be effective for your long-term wealth. Since your employer contributes 9.5%, you only need to add 5.5%. For this strategy, he said, “That’s why super should be the centrepiece of your long-term investment program, and why it’s the ultimate way to automatically build your wealth.”
This can be an unexpected item. However, if you are a frequent flier, using an airport lounge can be a must for you. By salary packaging the lounge cost, you can save your spending on the airport lounge.
Disability Income Protection Insurance
Disability income protection is insurance to protect your income when you cannot work because of injury or sickness. To get the coverage, you should pay the insurance fee. By salary packaging the insurance, you can maintain the protection with pre-tax money.
If you want to consult with a financial adviser about your finances or investments, you may be eligible to use salary packaging for the fees. In addition to your gains from your investment, you can save your money for the advice. Please note that you cannot salary package the initial consultations about salary packaging.
Membership Fees and Subscriptions
If you are thinking to buy a membership or start a subscription that is work-related, you may be able to use your pre-tax money for that service. If you are in a public or private not-for-profit hospital or charity, you may be eligible to salary package the cost of any club or membership within your annual salary packaging limit even though that’s not work-related.
Relocation Expenses & Remote Housing
If you have to be relocated due to your work, you may be able to salary package your relocation expenses. In terms of relocation, both buy and rent are applied. You have to check with your employer or financial adviser, but you could salary package not only the moving expense but also utility connections for electricity, gas, telephone, the internet, and more. Stamp duty, advertising fees, agent fees, and borrowing costs depend on your circumstances.
If you have to live and work in a remote place due to your job and if your employer supports this salary packaging benefit, you might be able to use this benefit. The items that can be salary packaged include mortgage interest, purchase costs incurred to buy your house, and rent payments.
There is no doubt that you become better with education. Spending on education is a great investment for yourself. Here, self-education refers to courses that are undertaken at an educational institution, attendance at seminars or conferences related to your work, self-paced learning, and study tours in Australia or even overseas. You might be eligible to claim for fees, books, and other equipment only when you can prove that there is a close relationship between the undertaken course and your occupation.
There can be many types of work-related electronic devices and other tools. If your employer has this benefit, check with your employer what specific items can be salary packaged. To give you some examples, it could be stationary, computers, equipment and facilities repairs, software, and more.
Maxxia Car Lease
In the section above, we learned what items can be salary packaged. One of the other major benefits Maxxia offers is car leasing. How it works is pretty much explained in What is Novated Leasing (or Car Lease). As a matter of fact, it is also quite similar to salary sacrifice since you are allowed to use your pre-tax money to support a certain item (in this case, a car).
How Customers Think About Maxxia
When you consider to buy a product or to use a service, you will wonder what experiences other buyers had. Investigating the reviews of other users can lead to a better decision, and it is a wise thing to do as a consumer. If people are dissatisfied with it, they will complain about it and won’t recommend it. If they are happy, they will leave positive comments and share their great experiences. If we can compile and analyze those reviews, we can have an assurance about the product or the service.
That’s what I am going to do for you. I used more than 1500 reviews people left on ProductReview and summarized those data to generate easy-to-understand graphs and charts. Those visuals will allow you to understand the overall sentiments the customers had toward the product. They are also extremely easy to understand.
Maxxia Positive Word Cloud
In a word cloud, some words will appear bigger because those specific words were more frequently used among customers. So, the bigger the more frequent, thus, if those big words are positive, it proves that most of the customers had a positive experience. Have a look at the word cloud of Maxxia.
The word cloud above should have given you a good impression of their products. The most frequent word that actual customers used in their reviews was “great”. Other big words are also positive – “excellent”, “helpful”, “easy”, “fantastic”, and many more. Just by looking at the word cloud, we can learn that most of the people were satisfied with their product. Among the words, “helpful”, “easy”, “car”, and “novated” especially are noteworthy since they are more specifically descriptive.
The word cloud tells you what descriptive words people used for the product. There is another angle we can use to understand the Maxxia customer reviews. That is by categorizing the reviews into a type of 10 sentiments. While I used the review titles for the word cloud above, I used the review contents for the sentiment analysis. The result is the graph below.
I was able to run my sentiment analysis code to find out what specific sentiments people had over the service. As we could guess from the word cloud, most of the review contents were positive. Of course, people shared some negative thoughts. I haven’t seen any review that is all positive. Despite the negative reviews, overall, people left positive comments toward Maxxia. If we summarize the sentiments simply by positive and negative, the picture becomes clearer.
As you can see from the above, the majority of the customers felt positive about Maxxia.
Another type of analysis I often use for a product review is using Google Trend. It is an extremely helpful service by Google that gives you a historical Google search trend. The idea is that if a product or a company can maintain or can increase its search volume over many years, it supports the quality of the product. If a product is bad, people won’t show their interest and eventually will never search for the product anymore. Then, how is the trend of Maxxia? Plus, how has people’s interest in general been changed?
The blue line shows the trend of Maxxia from Australia over the past 5 years. Although there have been some fluctuations, overall it shows a consistent level of interest, which is a good sign of the service quality. Considering the past trend, it is likely to continue in the future as well.
We have found out the concepts of salary packaging and novated leasing that Maxxia offers. Plus, we learned what we can salary package. My analysis told us that Maxxia has been able to receive positive feedback from its customers. Furthermore, Maxxia has been able to keep a consistent level of interest from people. Considering all these, I believe that the firm provides good quality service, and you can consider to use it.
If you want to estimate how much you can save by Maxxia’s novated leasing, try their calculator.
I also reviewed other salary package providers in my blog.