Salary packaging

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Salary packaging (also known as salary sacrifice) is a term used to refer to the inclusion of fringe benefits in the remuneration package of an employee, in exchange for giving up part of their monetary salary.

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[edit] Salary sacrifice in UK

This is commonly used to provide an employee with benefits such as pension contributions in return for the employee agreeing to a reduction of their contractual salary.[1] This is a contractual arrangement between the employer and the employee, and is not interfered with by the tax authorities. It is potentially of benefit to both parties as it saves them both NI contributions.

[edit] Salary packaging in Australia

Items commonly salary packaged include:

Some companies also allow their employees to salary package other items including household utility bills, although this is complicated and normally requires the assistance of a third-party company who specialise in salary packaging arrangements.

Salary packaged benefits in Australia generally attract Fringe Benefits Tax, with a few exceptions - some benefits are Fringe Benefits Tax exempt, including mobile phones and laptop computers.

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