Hi
My new employer are offering salary sacrifice with MAXXIA.
As it s totally new for me, Is it worth doing it?
THANKS
Is It Worth Doing Salary Sacrifice ?
bennarra on 08/01/2022 - 22:41
Last edited 09/01/2022 - 12:14 by 1 other user
Last edited 09/01/2022 - 12:14 by 1 other user
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Totally agree. Mrs works for health and is packaging due to the benefits but we obtained advice before committing. Common sense really.
'people cannot see the benefit of forking out a couple of hundred buck to get professional advice'
last time I went to a financial advisor he spent an hour asking me all the detailed questions
and then said come back next time, we'll have a plan ready
when I came back he showed me a 100 page printout (mostly standard stuff about insurance, wills, managed funds) said 'that'll be $2600, and if you don't buy it, I won't have dinner tonight !'
I thanked him and walked out.
Check with Maxxia, but I believe if you have no debt, you can sacrifice against your rent….. Happy to be wrong.
I found that salary sacrifice to top up super was a great option. Relatively tiny amount over time can bring retirement forward in a measurable way. Worth doing the sums particularly if you can bite into the remuneration that is above certain tax brackets.
The rest of it was of no value to me.
how can it bring retirement forward? can't access your super until you reach retirement age.
Pension age is at least 10 years later than the age I was able to access super. For so many in OZ retirement age will be pension age as this is when they can live with support. Given your question I am assuming you intend to retire earlier than pension age.
Salary sacrificing to super to bring me under tax thresholds was useful to me to build super. Have been retired for a couple of years now and possible pension still a few years away. If you want to go earlier than you can access your super you need another income to bridge this time and I can’t really see how Salary Sacrificing assists with that.
If you want to retire as early as possible there are forums and internet groups constantly discussing strategies. Super is an important, but not the only one of these.
I work for a Not For Profit. I salary sacrifice for my rent (it can be for a number of things) and also for eating out expenses. Tax free money! Salary sacrifice is definitely in your benefit!.. BUT you do need to be careful if you pay for things based on your salary, like HECS, child support, and the Medicare levy surcharge, for example.
If you make 80,000 you wouldn't normally pay the surcharge (salary under 90,000) but because of the way salary sacrifice is calculated, you will effectively be earning a lot more according to the taxman. You basically double the sacrificed amount. Google 'reportable fringe benefits'.
My colleague was pissed off because he now pays child support based on him earning a lot more money than he actually received, even if he'd paid tax on the sacrificed amount. Definitely not in his benefit.What everyone above says. Don’t do it until you really understand it all either by your own research or professional advice. Build a spreadsheet and play with the variables. There should be no timeline pressure. Particularly understand the exit rules if you decide it’s not working for you. I did it for many years with car leasing (back when it was good value) and put the extra few hundred dollars a pay directly into super - enjoying that retirement benefit very much now. It’s much more complex now though. You might even want to wait till other work colleagues have tried it out?
Dpi you mean salary packaging
Some employers share the savings on a 50:50 basis and will hype it up and push employees to sign upMost will save 1-2k a year but as others mentioned above some people are worse off as they gross up the packaged amount for some tax calculations
Read thoroughly about it and/or consult a financial adviser before you decide
Salary Sacrifice involves a multiplier benefit under the taxation act thereby making your gross more than you earn SO if you are paying child/spousal maintenance it doubles your income (ie benefitting your maintenance person) IF this is NOT your case use it to pay your mortgage or rent. It is only to a max of about $352 a fortnight. It is automatically put on your annual tax group certificate statement You CANNOT use it for a sal sac deduction to a mortgage whereby you draw funds in a redraw situation. DO NOT get sucked in to a MAXXIA sal Sac car loan.
Should you wish to do so, lease the car from whoever you wish to buy a car from & as in my case do a guaranteed future value balloon. Go for it …..Good luckIf you dont need a new car then theres not much for you to salary sacrifice.
Some NFPs including NSW Health allow salary sacrificing for things like rent, entertainment and mortgage payments. Most of the time it’s worth it and far better than your standard car lease.
If you're on the top tax bracket 39%+
Salary Sacrificing works ok (for a car at least) - I don know about Credi Cards, Parking, etcAnything less basically means you're paying more from your pocket to get additional tax concessions.
Lots of ppl assuming this is only car related. Per a couple of replies if you are working for NFP and packinging entertainment it is always worth it.
100% yes.
In my work we can have a separate bank account that is Tax free. $15900 a year, $600 a fortnight. Its completely tax free as far as I'm aware. I cannot withdraw cash or do bank transfers. The card is with Bendigo bank. The only catch is that the balance of the account has to be less than $10 by the end of march (Fringe Benefits tax year).
Last year I had only a week to spend $600. Ended up getting some gift cards.Go for it. Talk to the finance department first. I'm taxed on 45k, rather than 60k.
Yep this is Salary Packaging and 100% worth it. I just stick mine on my mortgage so I don't have to worry about managing the balance.
What industry or line of work is that?
I read all these comments and it seems I'm paying a stupid amount of tax with little benefits.Generally Not-For-Profit and some health sectors.
yes but don't salary package a novated lease into it, just everyday living expenses. In the first year it won't seem like much of a saving after 10 it is significant.
I SS $100 per fortnight into super - I'm in the 35% tax bracket, so I take home $65 less a fortnight to put $100 into super.
I think you still have to pay 15% tax on that?
True, the super company takes the 15% - so really I'm taking $65 a week less home to put $85 into super. Still worth it for me. It's about a 20% increase in my super contribution.
- If I say that I will drive 10,000km a year with novated lease and I only drive 5000km; will they reimburse me after the lease ends?
- Is the balloon figure usually very below market value or market value? (Is it usually a good deal to buy it after lease ends?)
Assuming that the answer to 1 is no, and answer to 2 is no…
I did the sums with leaseplan calculator for a low six figure salary, 10,000kms for a $30,000 car. The tax benefits were about 3k in savings and overall I wasn't super convinced it was worth it assuming you had the cash ready to go to buy outright.
However if you are trying to organise your own finance then maybe it's worth it but I didn't do calculations on that. Disadvantage of course is if you leave your employer theres some extra work involved.
Here is how I broke it down for myself.
Buy car 30k
Running costs: 10,000km / 100km (to get per 100km fuel cost) x 8 (litres per 100km) x $1.50 (average price of fuel) + $400 per year service (average) + $2000 comprehensive insurance/reg
So the privilege of driving a new car for 3 years (typical lease term) for my circumstance is $30,000 + (3 x 3600) = $40,800Whereas Leaseplan says that 30k car is $944 per month, which is 944 x 36 = $33,984 but I get 3k tax benefits a year, so I will deduct 9k from that so the privilege to drive it for 3 years under lease is $25,000
So for it to be worth it, the balloon would have to be around $15,000 dollars after 3 years for me to justify the lease option which would then roughly equal out the buy outright option. I reckon that the balloon figure would be higher but I haven't asked so I'm not sure. Not sure if I am doing these calculations correctly but I tried to convince myself it was the way to go but I wasn't too sure.
I don't need a car badly but I thought it'd be fun to drive a new car thats all. Another thing to consider is you may not have the $$ for an outright purchase and you'd factor in a 4% interest loan or something like that which may make the lease worth it… I probably have it all wrong as I haven't actually spoken to a professional about it but that's how I did the calculations for myself. Hope that helps
The balloon (residual value) is a set percentage of the driveaway price and is dependent on the length of your lease.
The ATO has set this, from what I saw last year, not sure how frequently these rates change?
12 Months - 65.63%
24 Months - 56.25%
36 Months - 46.88%
48 Months - 37.50%
60 Months - 28.13%So in your example, for a $30k (driveaway) car, the balloon after 3 years would be $14064. So I guess worth it in your case?
You've provided zero information in your question, how is anyone supposed to answer this for you?
Yes but maybe no
I work in the public sector. I earn the equivalent of 92K. After salary sacrificing, the ATO says I earn 70-odd K (yay!) but Centrelink says I earn 100K (boo!). I have three kids so the hit to FTB is significant for me. On balance, I am probably still marginally ahead but then there is the hassle of dealing with the gherkins from the salary sacrificing company. I might scrap it I think.
If you dont work for a non-profit AND your tax bracke tis not the TOP one the answer is NO.
If you work for a non-profit perhaps it can work to your advantage due to the tax advantages available to not for profit employees.depends on your salary and how u manage your super funds..
if ur in top tax bracket then definitely yes..
you dont need financial advisor. just buy bitcoin on a regular basis..
If your on Centrelink it's important otherwise no, absolutely not.
Just tell them your situation.
I work in salary sacrifice and can help you decide if you PM me. It's better than sifting through all these assumptions people write here
There's no absolute yes or no answer without knowing one's situation
Salary packaging a car is a big no no unless you're on $140k+ a year tbh. The incentive just isn't as good as it used to be with the government cracking down on it.
If you're in health and you can salary package your mortgage then definitely do that. I personally think its a bit unfair that one government department can do this yet not others.
As for the eftpos/credit card if youre not churning points I'd definitely be looking into getting laid salary directly into one of these for spending.
On a novated lease a performance car could be more affordable for 20-30 year old Males on <100k since the bundled expenses could be cheaper than paying insurance + other expenses. It is very case by case though and would require some calculations for the individuals circumstances and car choice.
To answer your question - if you work for a charity or public hospital (PBI) then it's an absolute winner.
Depending on the PBI status there are two levels you can sacrifice up to.
The end result is usually a tax saving each year of $3-$6k per annum.
It's a tax incentive offered up to compensate people working in industries that wouldn't pay as much as other private business.
The use of the "credit cards" are now commonplace and the most convenient way of using the pre-tax money for purchases
Either way, absolutely maximise it and note that the thresholds work on a FBT year (April through to May) - so if you have just started now - you can maximise your salary sacrifice between now and March 31 and get huge tax savings.
This is a no-brainer - yes.
If you work for non for profit, you are essentially reducing your taxable income by at least $16,000. That is your general expenses "pool". This can be anything from rent, mortgage, any type of bill. It is recommended if you do not spend this much on general expenses, to use a credit card for all of your purchases, granted that you are repaying the credit card straight away. This is an easy way to create 'general expenses' for you credit card bills/payments.
You can also use the pool "venue hire" or "meals and entertainment". Essentially any hotel stay or meals that you purchase, whether that is eating at a restaurant, or ordering take away, can be used. This amount is capped at I believe $2,500 (on top of the $16,000 for general expenses).
At the end of the day, you are reducing your taxable income, so you are paying less tax. It's as simple as that. Your typical yearly tax return may be lower, however you are taking home a higher pay packet each time you get paid, due to less tax being paid overall.
If you have any questions, I am happy to help you out. I have helped out many at my workplace.
The Maxxia rep's can be helpful, but do not let them talk you into a car lease. If you do not need a new car, simply tell them no. Just go for the Salary Packaging
Good luck
If you’re renting then you can easily claim the full $16k for rent. No brainer and will add a decent bump to try take home pay.
There is some bad advice in this forum.
Plus you haven't provided enough information about yourself or the type of salary packaging on offer to provide advice.If you're talking about Salary Packaging (IE you work for a Not-For-Profit) then yes you should 100% do this. Stick it on your mortgage or rent, or you can get a visa card with the money put on it. This is literally free money used to entice people to work in what are generally "lower paying" industries.
(Source: Worked for a NFP for 10 years and packaged the entire time).
I wouldn't bother with the entertainment card, but if you eat out often enough it might be worth it.
Salary Sacrifice is a different proposition and i'm not qualified to comment, but most people say it's not worth it.
the OP needs to define what salary sacrifice. Theres 'living expenses', 'meals and entertainment' and 'leasing' with maxxia.
Salary packaging — pay less tax b/c no need to pay tax on the packaged portion so yes go for it.
Salary sacrifice — your employer borrows money to buy a car (plus everything related to the car) for you and you are repaying the loan with before tax income. Not worth it.Most people advising against salary sacrificing vehicles are likely those who have never done so themselves; perhaps as a way to justify their own reservations…
Cash-flow + Fleet discount + Tax break + Convenience = no brainer
*I salary sacrifice my cars and love it.
You forgot to mention fees and high interest rate of the loan.
It is only beneficial if it drops you down a tax bracket. If not, you may find that the FBT you pay on it could exceed what you would pay yearly if you were to just take out a standard car loan. Remember that for many that salary sacrifice a car, you don't own it at the end of the repayments unless you pay a rather high balloon amount. It's a novated lease until that point. With a car loan, you own it immediately.
I salary sacrifice a car because for me on a six-figure income, there is significant tax savings for me. I also have it fully expensed so I don't pay a thing in terms of repairs, servicing and fuel. After 3 years, I trade it in and do it all over again so the idea of always having a new car is appealing to me and one of the few luxuries I engage in.
I know folks do SS for their home loans with 100% offset account. A great way to reduce loan and tax at the same time.
anyone thinking of doing this, take note you sign the contract. you are bound to it. No matter what. Even if you go into financial hardship, you need to pay out the full amount
For a car lease, yes
Car is terable, they screw you on the lease.
For non profit companies the morgage, credit card and meals is amazing. its $16k of your money tax free.
note: you still have to pay increased hecs medicare levy and probably other stuff. in my case even with increased HECs it was more then worth it.
Superannuation or leasing? Two different things.
Do the maths and you'll quickly figure out it's not worth it (talking from experience here).
The FBT neutralises any benefit you get, plus the interest rates are hardly competitive, then there's all the hidden fees from these mobs, you're much better just straight financing. If you can then get any kind of tax benefit (say via log book method if you partially use the car for business) you are way out in front.
With Maxxia you'll experience the classic "sir, there aren't enough funds in your account for your (tyres/service/car wash/insurance), we need to make a one-off deduction"
The ONLY time the model works in your favour is if you buy a veeeeeery cheap car (say <$25k), and do a massive amount of miles in it every year, that's the only time you get a real tax break from this.
In summary, don't be another sucker who let's these leaches survive.
Maxxia is new at my work. I wanted some info, and boy those sellers are insistent.
It is very confusing with all the stuff.
I do appreciate this thread op and the people who polited explained stuff.
With hecs and cheap finance on my car I doubt it is worth my time.
Hi mate, I'm looking to buy a new car soon might need to jump on finance. What's considered as 'cheap finance' nowadays on cars? Thanks!
I am paying about 4-5% depends on the lengh of payments. I used my broker.
My other car, was my first finance ever, and it was like 9% i reckon.
Argh ok thanks ！
Novated Leases are different to a personal loan, in a sense that you are locking in your agreed interest payable over 'the entire term of your contract'
So say you sign up for a 5 year lease (60 months) and you have to leave your job for whatever reason a few months, years in to the contract….
You still must pay the remainder of your 5 year term worth of interest, even if you wanted to payout the finance early! This results in people seeing a higher payout figure than they expected.
Not only that, you lose your salary packaging benefits early and you must payout the rest of your loan (with 5 years of interest) with post tax dollars.
On a normal personal loan, if you wanted to payout the finance early, generally you only pay the interest incurred up to the date you wish to payoff the loan.
Now think about that, before you consider a Novated Lease.
My partner has one. She thinks it's ok. I think it's a rip off given you spend x years paying for a car you don't own. Only works if it takes you into a lower tax bracket.
never heard of MAXXIA so googled it - feel free to read the reviews - https://tinyurl.com/2p8bacwa
if you feel you can trust your employer to not fake your super on your payslips while not really paying it to your super account, and MAXXIA who I've never heard of before, then salary sacrifice is a great 30% or so free money for your future - not accessible until your release age now increasing from 60yo
kinda like saving for the future - is it worth it ? If you die sooner, then no. If you live longer, then yes. Take your pick.
Tax accountant here that specialises in fringe benefits tax.
Under any salary sacrifice arrangement, you are agreeing to forego some of your salary in order for your employer to give you another benefit. That benefit can be a range of things from car, to car parking, meals, travel etc.
The reason you may benefit from this is it reduces your pre-tax salary, however you need to pay any FBT that occurs on these benefits (plus admin fees to maxxia). Under the FBT rules, several categories of benefits have special tax calculations that may result in a better result than receiving your full salary and paying for these out of post-tax salary.
Whilst fringe benefits do not form part of your taxable income, they are added to your income for the purposes of working out things like HECS repayments, MLS threshold, family tax benefit etc, so this could be a negative for you.
In order to determine whether it's worthwhile there are a lot of things you need to factor in such as your income tax bracket, impact of your reportable fringe benefits, and what benefits you want to salary sacrifice.
Another thing to note is that some benefits are completely FBT exempt within limits, and some not for profit organisations get concessional FBT treatment so employees may receive a FBT exempt (or rebatable) amount up to a limit.
So in short, there is no easy answer to this, you need to consider a lot of factors to determine the potential benefit, if any.
salary packaging is absolutely worth it, no questions about it. If you work for public healthcare, you can just claim expenses like mortgage, rental, car loans as a tax deduction. Essentially, you get a 9k tax deduction as long as expenses are >9k/year. Also, you get a meals/entertainment card loaded up with $105 a fortnight, which accumulates and very handy for most people.
I know many people doing 2-3 jobs claiming multiple sets of salary packaging in public or Not for profit sectors. I.e working 3 part time/casual jobs and claiming 3 sets of salary packaging entitlements. NFP gets 15.9k deductions per company x 3, so essentially a free 47k tax deduction per year. If you play it right and balance the hours in each job, you can pay very minimal tax.
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It beat me that when it comes to an issue that has obvious financial implications people cannot see the benefit of forking out a couple of hundred buck to get professional advice