Employer of Choice - current marketplace jargon for businesses that wish to, not only attract new quality employees, but retain the quality employees they have.
Salary Packaging ... Salary Sacrifice ... Flexible Remuneration - they all mean the same.
By offering the benefits of Salary Packaging employers are able to ensure they maintain the level of quality employees they need to prosper.
As a strategy, an employer offers Salary Packing to the employee and thus effectively increases the benefits and take home pay available to that employee. This means a competitor will need to provide a higher Total Employee Cost (TEC) to secure the prospective employee. By demonstrating to an employee their value to the organisation by way of a higher TEC, there is an immediate increase in their feeling of worth and status.
This strategy comes at no cost to the employer as an outside administrator handles all the payments, calculations of Fringe Benefits Tax (FBT), Input Tax Credits (ITCs) or GST, reporting and compliance with Taxation requirements. In effect, the company's payroll team, load the deductions into each employee's salary structure and each payday the funds are transferred automatically into the joint trust account of the company and the administrator. The payroll team then have no other commitment until the ITC (or GST) report is provided, by the administrator, for inclusion on the company's BAS.
At the end of each FBT year, the administrator provides the payroll team with the report on the FBT liability for each employee who has packaged and forwards the amount held to the company for on-payment to the Tax Office. The FBT report is compiled by the administrator during the year and if a motor vehicle is involved, it is monitored to ensure the employee is not accumulating a large FBT liability (under the statutory method) due to inadequate mileage.
The administrator will arrange for payroll and HR staff to be trained in the processes and then conduct education seminars for the employees on the benefits and operation of the salary packaging scheme.
Dependant of the tax status of the employer, which may range from Full FBT to Rebateable and on to PBI/Charity, a varied number and type of benefits can be offered for packaging.
An example of the benefits could be:
Exempt Items- Superannuation
- Laptop Computers
- Mobile Phones (used mainly for business)
- Palm Pilots / Electronic Diaries
- Airport Lounge Membership
- Income Protection Insurance
- Briefcase / Calculator
Concessionally Treated Items- Motor Vehicles (by way of a Novated Lease)
- Associate Lease
- Some In-House benefits
- Car Parking
Full FBT Items - generally packaged by Charitable (PBI) and/or Rebateable organisations
- Mortgages (Home / Private Residence)
- Rent
- Medical Insurance/ Health Benefits
- Credit Card
In this day and age of ensuring a stable and productive workforce, how can you afford to not utilise every means available to attract and retain quality employees?