Salary Sacrificing Mortgage Question?

Ldg1991 on 21/01/2021 - 11:41
Last edited 21/01/2021 - 15:49

Hi All,

My wife works for a non-for-profit organisation, so she is able to salary sacrifice up to ~$15k towards towards the mortgage.

The funds go to the offset account, but recently we fixed our home loan, so the offset no longer applies. It is still the account that gets debited for mortgage payments. We asked whether where the payment goes to needs to be changed to the Loan account directly, but was told by the salary sacrifice company it doesn't need to be.

We have only been salary sacrificing for a few weeks, so we are quite green. Just wanted to double check if anyone here has experience with this, I don't want to pay a lot of fees if the advice I've been provided is wrong. If the waters are muddy, I will go to an accountant.

Thanks!

Financial

Comments

  • arkie0 on 21/01/2021 - 11:52
    +1

    The information you were provided is correct, the offset has nothing to do with it and the funds can go anywhere. If they go into the loan itself, you can not redraw from the loan.

    • dg1991 on 22/01/2021 - 10:26

      thank very much! thats exactly what i needed clarifying with

  • QuicheLorraine on 21/01/2021 - 12:13
    +4

    If your wife has only recently started her job, make sure she asks her salary packaging provider to maximise her salary packaging before the end of the FBT year (March 31st). This means she'll pay much less in tax until it resets on April 1st.

    • trex on 21/01/2021 - 13:42

      Just curious, what extra tax will she be paying? Being a NFP, the employer can package up to $15,900 per employee every year without attracting FBT and I don't think the threshold is pro-rated based on employment period. Any FBT is also charged on the employer and not the wife? Only thing I can think of is that this will be included in the reportable fringe in the tax return and will affect family benefits from Centrelink.

      • KevinL on 21/01/2021 - 13:44
        +2

        I don't think the threshold is pro-rated based on employment period

        That's the point. If she has only recently commenced, she can sacrifice the full 12 month's worth in the remaining period (until end of the FBT year)

        Likewise if you change employers during the year you can sacrifice two lots (once for each employer)

        • trex on 21/01/2021 - 13:51

          Okay, I mis-read downcomesthenight to mean that she will pay extra taxes if she packages it now rather than later. My bad.

    • dg1991 on 21/01/2021 - 15:54

      Thanks for the reply. Yes we did that, using up the full threshold before end of March.

  • Youfah Mizzum on 21/01/2021 - 15:30
    -1

    You want your wife to contact the payroll department and get the salary sacrifice to go to the mortgage account - not the offset account.
    And then you adjust your own mortgage repayments to suit.

    The complexity lies in the fixed mortgage - I don't know if your lender needs the repayments to come from the offset account or if they're OK with funds coming from elsewhere as long as they meet the fixed repayment amount. If the salary sacrifice doesn't quite meet the fixed repayment then you'd need to make up the shortfall from the offset.

    • dg1991 on 21/01/2021 - 15:56

      Thanks for taking the time to reply. So this means, do you think the current arrangement of going to the bank account is unacceptable and against the rules?

  • jerimiahhalls on 21/01/2021 - 16:00

    Make sure your Wife doesn't have a Hecs debt either. It can mess with your salary tax and may leave you with a hefty bill to the tax man come eofy.

    • dg1991 on 22/01/2021 - 10:28

      luckily she doesn't :)

  • ArcticSilver08 on 21/01/2021 - 16:20

    What I do is just salary sacrifice off the credit card, then get fully reimbursed to my savings account - meaning I can use it to spend on whatever, mortgage etc.

    • dg1991 on 21/01/2021 - 16:37

      Thanks for the reply. If possible, are you able to elaborate further? So they pay $15000/12 into your credit card monthly. If there is a credit, it gets reimbursed to your bank account?

      • ArcticSilver08 on 21/01/2021 - 16:55

        Not onto the credit card, it gets put back into my bank account. The credit card is just what I use to claim on.

  • Meho2026 on 21/01/2021 - 16:38
    +2

    The salary package amount is applied to personal expenses like mortgage repayments, meaning that if you provide evidence of an expense like this, you are eligible to receive the salary package amount.

    You dont have to get the actual package amount paid into your mortgage account at all.
    You can get the money paid into any account and manage your money any way you choose.

    I used my mortgage to qualify for salary packaging and get the money paid into my everyday transaction account.
    Although you get the tax relief because of the mortgage repayments, your employer, the salary packaging company or the ATO have no bearing on what account the money is paid into or how you manage your finances to meet your expenses.

    • dg1991 on 22/01/2021 - 10:27

      Legend! thanks very much for your detailed response, you have put my mind at ease!

  • aocal on 22/01/2021 - 16:35

    Does that mean anyone can salary sacrifice to a mortgage or are there conditions?

    • dg1991 on 22/01/2021 - 17:19

      There are FBT exemption caps for people working for non for profits and for health professionals.

  • Findmebargain on 23/01/2021 - 10:33
    +1

    As a side note, there's also another $2,650 for Entertainment benefits (food/drinks and facilities hire/lease) that your wife could consider taking up this FBT year. Reason being that the rules have been relaxed for this FBT year due to COVID in that takeaway meals and even coffee are claimable if purchased from venues that offered dine-in options pre-COVID. So, it means it might have been easier to have met the requirements. Some salary packaging companies would accept proof of payment from credit card statements going back to the previous FBT year. So, worth enquiring with her salary packaging company for the process.

    • dg1991 on 13/02/2021 - 22:38

      Thank you, we are going to take advantage of this in the next FBT year!

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