If you have a study and training loan debt (HECS/HELP etc) you are still able to take advantage of salary packaging AND you need to actively manage the amount of tax your payroll team deducts to ensure you don’t wind up with a shortfall.
Not that long ago the annual earnings threshold for needing to start repaying your higher education debt was between $55-56,000, and the rate started at 4%. Over the past 5 years the threshold has been reduced now to $46,620 with the repayment rate starting at 1%, rising to 10% for annual earnings over $136,740. When you salary package, you reduce your taxable earnings, but then need to add back the reportable fringe benefits, and this is where tax shortfalls can occur.
We help you to manage this through making a calculation to estimate addition tax to be withheld. This will reduce the risk of a tax shortfall at the end of the financial year when you lodge your income tax return. Given our situations often change from year to year, we recommend you having this checked on an annual basis – especially if you commenced salary packaging for the first time or have had a pay rise within the last 12 months.
Our team are focused on ensuring the best possible outcome from your salary packaging – so give them a call to discuss.