Are you interested in paying less tax and buy what you want? Paywise salary packaging can be a good option for you. This blog post will explain how you can save your money using Paywise salary packaging and how people think about it. Let’s first have a look at what the salary packing is.
What Is Salary Packaging?
Salary packaging is a great way to reduce your tax payment. By using salary packaging, you can use your pre-tax money to purchase certain items, and you will pay tax for the salary amount excluding the packaged amount. What you have to remember is that there are certain items you can buy using this policy. You can salary-package single or multiple items that are small and big. Let me share some big and small items you can package using Paywise. For these items, I referred to the list on their website.
When you want to purchase expensive big items, using salary packaging can reduce your tax payment significantly. Let’s find what big items Paywise can cover.
Novated Lease Vehicles
Novated lease vehicles can be paid by using the package. You can cut down a
Please note that this is not something you can decide to use by yourself. Your employer should provide this option. You need to check your contract or employee benefits if they provide this to their employees. If you plan to buy a car and your employee provides this option, use this because it will give you a lot of benefits.
It not only covers the car purchasing price but also includes running costs. You can buy a new, used, or even your current vehicle! With this, you can save on income tax, the GST on the purchase price, and all the tax and GST on all running costs. Not finished yet! You can get a discount on tires and service costs as well.
One thing people are not aware of is that you can use this for your immediate family – partners or your children.
Mortgage or Rent Repayments
A mortgage is also a big item you can salary-package. It is not just a mortgage but you can pay rent using your pre-tax money. Depending on the conditions that your employer provides, details can vary. And, there are certain conditions you should check.
If you plan to use it for your mortgage, there are some things to remember.
- Only available for the residence that you currently live.
- Payments directly made to your bank.
- Repayments can only be paid to a mortgage account, not to a loan offset account.
- You must be proven to be the borrower or be a spouse of the borrower.
If you plan to use it for your rent,
- Only available for the residence that you currently live.
- Only full of part of the payments.
- Payments directly made to the real estate agent or landlord.
- You should submit the current lease agreement.
- Payments made to the end of the current rental agreement.
It is important to check the list before applying for salary packaging for a mortgage or rent.
There are relatively smaller items you can salary package. Paywise supports a variety of small and interesting items that you may not have expected.
Living Expenses and Meal Entertainment
You can save everyday expenses including groceries, bills, clothes and more. How can you use this option for small items? You don’t need to keep invoices and receipts. You just need a Paywise card and use it for each purchase. Your fortnightly contribution is transferred to your card and will be made available within 48 hours from your employer sends money to you. You can frequently check the current balance and status is by using Paywise Member Portal.
The Paywise card can be used for meal entertainment such as restaurants, bars, and etc. This card is nothing different from any other prepaid and reloadable Visa card. If you want to order this card, it can be easily done via the member portal.
It is an interesting idea to salary package your earnings for accommodation. You worked hard, and you deserve to relax at a good accommodation place. Paywise explains that you can save over 30% of the cost. You can save not only for your stay but also for event venues for special occasions such as your wedding or birthday party. Please note that there is an amount limit for this benefit.
This is also an interesting offer from Paywise. E-Bikes are basically bicycles in a way that you still have to pedal to move forward. But, it has a motor that is activated when you pedal, and the motor assists you to pedal easily. With an e-bike, you can travel farther and faster compared to a traditional bike. It is a good alternative option for vehicles. You can consider salary packaging an e-bike.
Although each payment can be small, when it’s accumulated, it becomes big. Superannuation is probably one of the most popular items to salary package. Depending on the level of your salary, it could be beneficial 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%.
In 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.”
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 can 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. The expenses that can be covered:
- Courses that are undertaken at college, university, school, or other education places.
- Seminars and conferences
- Textbooks, stationery, and student union fees
- Accommodation, travel expenses, meals that are related to your self-education
Remote Area Benefits
Residing in a remote area has great benefits. If you list in a rental house in a remote area, you can package, in maximum, 50% of your total rental costs without having to pay any Fringe Benefits Tax (FBT). If you live on a mortgage in a remote area, you can package your interest and reduce FBT by 50%. In addition, you can package utility expenses including electricity and gas.
You can also save tax payments to purchase mobile phones, tablets, and laptops. This option will allow you to save GST and take advantage of your taxable savings. But, to be eligible for this benefit, the device you purchased and plan to purchase should be related to your work. The electronic items that are not eligible:
- Desktop PC
- Extended warranties
- External parts or upgrades such as flash drives, sound systems, modems, and routers
- Software not related to your work
- Non-portable printers
- Spare batteries
- Freight, insurance, and hardware that is not installed on your laptop
- And, other items that you need to check with Paywise
Airport Lounge Membership
This is something unexpected. Paywise salary packaging allows you to enjoy the convenience and benefits of Airport Lounge Membership using your pre-tax earnings. You can save hundreds by using Paywise’s discounted corporate rates with Qantas. Or, you can arrange your own membership.
How would people think about these great benefits? To answer this question, I went to https://forums.whirlpool.net.au to read through the comments of people. I was able to see positive comments on salary packaging. Let me share some of the comments.
“If you have it, it is great and you should use it as much as you can.” – DAVE
“VERY worthwhile.” – SStar01
Although I could find positive feedback, people gave advice that it is safer to get independent financial advice, so that you don’t have to be surprised regarding tax payment.
Salary Package Trend
We have learned about the Paywise salary package and its benefits. I’d like to ask, then, has this policy, in general, gained and maintained interest from the public? Whether it is government policy or commercial product and service, if the benefit or the quality is not good, it will eventually die as it loses people’s attention. However, salary packaging seems to have maintained a consistent level of interest.
I frequently use Google Trends when I need to research the level of interest from people on the Internet. You know Google is the largest search engine. They keep track of search history in their repository and share it with the public via an open service called Google Trends. By using it, I was able to generate the graph below.
This graph shows the trend line of salary packaging over the past 10 years in Australia. As you can see, it has been able to maintain a consistent level of interest. The period is 10 years, which is long-term. This proves that Australians kept showing their love toward salary package, and considering the trend, it is likely to continue in the future.
If we break down the interest by state, Northern Territory has shown the largest interest. After NT, the second biggest was from ACT followed by TAS and SA.
Paywise salary packaging provides a wide range of great benefits to employees. If your employer has these options given to you, I would recommend to use it. But, please ask your colleagues and financial advisor before making a decision to make sure it does not negatively impact your tax payment at the end of a financial year.
If you want to estimate how much you can save by salary packaging, check this calculator page.