Human Resources

University Policy on Salary Packaging

Policy No.
UP07/192
Function
Human Resources
Authoring Organisational Unit
Human Resources - Central Unit
Date Approved
01/01/2007 Revised 17/01/2014
Next Review Date
17/01/2017
Approving Body
Senior Deputy Vice-Chancellor And Registrar

The University of Western Australia

University Policy on: Salary Packaging

Purpose of the policy and summary of issues it addresses:

This policy defines the nature and purpose of salary packaging as a significant attraction and retention benefit to employees of the University. It outlines the benefits, eligibility, fees and tax implications and requirements.

This policy does not apply to casuals.

Definitions:

" ATO" means Australian Taxation Office.

"Employee" means a person employed by the University who has an ongoing or fixed term contract under the terms of the following Agreements (as amended or replaced from time to time) Academic Staff Agreement, General Staff Agreement, Childcare Employees Agreement and ELICOS Agreement.

"FBT Regular Payment Benefit" means an FBT exemption applies to a regular payment of a set amount.

"Supervisor" means the person who is responsible for day-to-day supervision of the employee.

"University" means The University of Western Australia.

"Work Related Items" means laptop, PDA, Tools of Trade or mobile phone used solely for work purposes.

Policy statement:

1 Purpose

1.1 Salary packaging is a voluntary arrangement between an employee and the University, where the employee agrees to forego part of their salary before tax in return for the University providing benefits of a similar value.

Salary Packaging is a tax effective way of receiving salary as a combination of income and benefits which:

  • allow employees to deduct some of their pre-tax income and use it to pay for benefits; and
  • can reduce the amount of income tax to be paid and increase the amount of take home pay each fortnight by reducing an employee's pre-tax income.

2 Independent Advice

2.1 It is important that chosen benefits are discussed with an independent financial advisor as:

  • individual circumstances will determine whether salary packaging is a benefit; and
  • there are tax implications which will make some benefit items unattractive to some people.

3 Eligibility

3.1 Salary packaging is available to employees with an ongoing position or with a fixed term contract period of three or more months.

3.2 All salary packaging must be entered into prospectively.

4 Notification Requirements

4.1 Employees with salary packaging arrangements with the University must immediately advise the Employee Benefits Section if they are:

  • to terminate employment with the University;
  • proceeding on leave without pay; or
  • increasing or decreasing their FTE.

4.2 Any outstanding amount for salary packaged items will need to be cleared prior to departing from the University and before the termination payment is processed.

5 Salary Packaging Agreement

5.1 A single Salary Packaging Agreement will cover all salary packaging at any particular time.

5.2 Once an Agreement has been signed, it will remain active and include future items. When adding new items to an existing Agreement, it is the employees' responsibility to familiarise themselves with the current policy.

5.3 A new Salary Packaging Agreement will be required for any additional packaging when the existing Agreement has been signed within the last 18 months but employment has not been continuous within this period.

6 Reimbursement

6.1 If reimbursements are required, the employee must complete the Reimbursement Claim Form and attach a copy of the receipt. Reimbursements will be provided to employees through the payroll as a lump sum in the next available pay period after the reimbursement claim form is received by the Employee Benefits Section.

7 Fees

7.1 Salary Packaging is managed and administered in-house and is self funded through the fees charged. All fees absorb any GST component.

The fee amount is a percentage of the value of the salary packaged item deduction.

8 Fringe Benefits Tax (FBT)

Fringe Benefit Tax was a tax introduced in 1986 to tax the value of fringe benefits given to employees in respect of employment. Certain items attract FBT, some may be treated as concessional (e.g. motor vehicles) and some may be exempt from FBT. A comprehensive list can be found on the ATO website.

8.1 All salary package items offered by the University are FBT exempt except for motor vehicles, which attract concessional tax.

8.2 Only one of each type of work related item can be purchased in any FBT year (April to March). For instance, it would not be possible to package a tablet device and a laptop computer within the same FBT year.

8.3 The University is not a Public Benevolent Institution and therefore does not have the same regulations for FBT concessions that apply to charities and hospitals.

9 Fringe Benefits Tax (FBT) Requirements

9.1 Employees with salary packaged work related items must complete the relevant Statutory Declaration before purchase. The Declaration must state that the item is used primarily for work purposes and must be signed by both the supervisor and the employee. The Statutory Declaration must be approved by HR Employee Benefits section prior the employee purchases the item.

10 What Cannot Be Packaged

10.1 Any earnings that are not subject to superannuation such as leave loading, overtime, casual payments and higher duties allowances may not be packaged.

Related forms:

Reimbursement Claim Form

TRIM File No:

F25058

Contact position:

Employee Benefits Manager

Related Policies or legislation:

Fringe Benefits Tax Assessment Act 1986

Academic Staff Agreement 2010

Professional and General Staff Agreement 2010

Child Care Employees' Agreement 2009-2012

ELICOS Teachers Agreement 2011