Thursday, 8 October 2015

Power Of 5K

It's always great to be working in a hospital. Especially more so in Oz. We're entitled to Smart Salary, which is a company doing salary packaging so you end up paying less tax. Sure, you pay $200+ a year for their services but you save thousands in tax. Great trade off if you ask me. It works by packaging either your living expenses (you get a "credit card" that you use to pay for your groceries or bills), mortgage or rent. Different hospitals have different yearly limits. This amount is $15900 where I work which equates to $611 per fortnight. The company take this amount off before your salary gets taxed. Say I earn $2611 this fortnight. Rather than get taxed for the entire sum, I'll get taxed based on $2k.

There's more. I can choose to take up an entertainment card which is a debit card that I can use to pay for my dine in meals (not applicable for take away). I set the amount that's to be deducted every pay day. At the moment, I've set it at $200. So using the same scenario, I now get taxed based on $1.8k.

There's always more. If I go on holidays, I can package the entire sum of my accomodations, regardless of the cost. So if I spent $1k on hotels, I can package the whole sum or choose to have it done over several pay periods. The campsites I book when I go camping? Yup, packagable too. But if you go on a holiday with a tour group, you'll have to ask your agency to separate out the cost of accomodation for you. If you go on a cruise, there's no way they can spilt it. So they just package the entire sum. My colleague went on a cruise for $13k. Can you imagine how many months where she doesn't have to pay a single cent of tax?

We also get novated car leasing. I'm not too sure how it works, just that they calculate the cost of the new car, how much fuel you use, insurance etc & take this sum pre-tax out of your salary. I've used their calculator before & say if I buy a new lower range car, like Jazz or Yaris, I'll be packaging $300+.

Can you see where I'm going? If I have novated car leasing, I'll be paying tax based on $1.4k of earnings per fortnight based on the initial scenario. I was paying close to $1k tax before Smart Salary. Now I'm paying about $600. In a year, I'm saving about $5k in tax. Not bad eh?

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