WEBVTT - Nice (salary) package 0:00:00.200 --> 0:00:13.320 She's on the Money. She's on the Money. 0:00:17.120 --> 0:00:20.200 Hello and welcome to She's on the Money, the podcast 0:00:20.200 --> 0:00:24.599 and millennials who want financial freedom. Paying tax, as Victoria 0:00:24.800 --> 0:00:29.200 define often says, is a privilege here in Australia. But 0:00:29.280 --> 0:00:32.720 despite its importance and its necessity, I think we'd all 0:00:32.760 --> 0:00:35.160 probably be lying if we said it we didn't grown 0:00:35.159 --> 0:00:37.400 a little bit each week when the tax man does 0:00:37.640 --> 0:00:40.279 dip his little fingers into our hard earned cash and 0:00:40.479 --> 0:00:42.159 take a good portion away, am I right? 0:00:42.240 --> 0:00:44.479 Feet? All right, well that's not exactly how it works, 0:00:44.520 --> 0:00:46.080 but yes, carry on. 0:00:46.240 --> 0:00:49.520 But what if there was a legal, ridgi ditch way 0:00:49.600 --> 0:00:52.720 of decreasing the amount of tax we pay by packaging 0:00:52.800 --> 0:00:53.680 our salaries? 0:00:53.840 --> 0:00:56.480 That is a ridgidtchway of decreasing the amount of tax 0:00:56.520 --> 0:00:57.080 you pay. 0:00:56.920 --> 0:00:59.280 And it's a real thing, So it's called salary packaging. 0:00:59.400 --> 0:01:01.760 Makes sense and joining me to get to the bottom 0:01:01.800 --> 0:01:05.560 of it all is financial advisor Victoria Divine Victoria. Let's 0:01:05.600 --> 0:01:08.840 dive in head first. Salary packaging is a very hot 0:01:08.880 --> 0:01:11.080 topic in our community and I do have a lot 0:01:11.080 --> 0:01:13.800 of questions to get to today. But to start us off, 0:01:13.880 --> 0:01:15.160 what actually is it? 0:01:15.319 --> 0:01:17.920 I like this topic because it has been requested so 0:01:18.319 --> 0:01:22.040 many times the community literally goes wild for salary packaging 0:01:22.120 --> 0:01:25.080 questions and what they can and can't package. But also 0:01:25.160 --> 0:01:26.959 I think it's important to point out that if this 0:01:27.080 --> 0:01:30.000 isn't available to you, that's okay. Like often this is 0:01:30.040 --> 0:01:34.760 only available to government workers and healthcare workers and certain professions. 0:01:34.800 --> 0:01:36.480 So if it's available to you, well done. In this 0:01:36.600 --> 0:01:39.800 episode is for you, if not interesting to know about. 0:01:40.160 --> 0:01:44.039 But also it definitely isn't something that every single employer does. 0:01:44.120 --> 0:01:46.399 But if you don't have salary packaging and you would 0:01:46.400 --> 0:01:49.240 love to have it, every employer in Australia is gonna 0:01:49.280 --> 0:01:51.720 hate me. Now have a chat to your employer and 0:01:51.840 --> 0:01:54.160 just see if they can do anything about it. If 0:01:54.200 --> 0:01:56.960 that is something that is of value to you. So 0:01:57.320 --> 0:01:59.840 to jump straight in, which I think is the only 0:01:59.840 --> 0:02:03.800 way to jump in, you can't dive backwards. But salary 0:02:03.800 --> 0:02:07.280 packaging is often known as salary sacrificing and it's basically 0:02:07.320 --> 0:02:09.919 a way of paying less tax by receiving a portion 0:02:09.960 --> 0:02:12.600 of your pre tax income in the form of different 0:02:12.639 --> 0:02:17.200 benefits like devices or cars or superannuation contributions. As we 0:02:17.240 --> 0:02:20.320 know in Australia, the lower your income, the less tax 0:02:20.360 --> 0:02:22.200 you pay, which is a bit of a money win, 0:02:22.280 --> 0:02:25.600 but kind of in a backwards way. And salary packaging 0:02:25.720 --> 0:02:29.200 is a way of legally paying less tax while still 0:02:29.240 --> 0:02:31.200 being on the same salary as you were before. But 0:02:31.280 --> 0:02:34.960 instead of only income, you've lowered your income plus benefits, 0:02:34.960 --> 0:02:37.560 which is kind of cool. The typical way that we 0:02:37.600 --> 0:02:39.840 think about our expenses would be to pay for them 0:02:39.880 --> 0:02:42.800 once we receive our income into our bank accounts and 0:02:42.840 --> 0:02:45.960 once tax has been removed from that income. But salary 0:02:45.960 --> 0:02:48.359 packaging actually means that you can cover some of your 0:02:48.400 --> 0:02:51.160 expenses like your more Google, your rent, or a new 0:02:51.240 --> 0:02:53.440 car if you listen to that episode a couple of 0:02:53.440 --> 0:02:57.000 weeks ago by using your pre tax income, which may 0:02:57.080 --> 0:02:59.480 leave you with more disposable income each week to work with, 0:02:59.639 --> 0:03:01.239 which it kind of sounds like a dream. 0:03:01.360 --> 0:03:03.840 It does sound like a dream. So how does this 0:03:03.960 --> 0:03:07.120 actually work with your employer? Do you just sit down 0:03:07.280 --> 0:03:09.280 and have the chat with them? Or is it only 0:03:09.320 --> 0:03:10.959 some workplaces off books? 0:03:10.960 --> 0:03:13.919 Mate, I want salary packaging and they can get it. No, 0:03:14.120 --> 0:03:17.640 that's absolutely not how it happens. Most larger workplaces will 0:03:17.800 --> 0:03:20.839 work with you to establish a salary packaging plan as 0:03:20.880 --> 0:03:23.520 long as it works for both parties and you can 0:03:23.560 --> 0:03:25.840 easily check with your employer by having a conversation with 0:03:25.880 --> 0:03:29.360 your HR department, but smaller businesses might not offer this, 0:03:29.480 --> 0:03:32.720 so honestly, it's best case scenario like check see if 0:03:32.760 --> 0:03:34.920 they do. But it is a bit of a hussle 0:03:34.920 --> 0:03:36.480 and it can be a bit of a muck around 0:03:36.560 --> 0:03:39.640 for smaller businesses, So please don't slave if your employer 0:03:39.680 --> 0:03:41.800 if they don't offer it, and I feel like it's 0:03:41.840 --> 0:03:44.840 completely reasonable to not if it is fantastic. It's a 0:03:44.840 --> 0:03:48.320 benefit of your employment. So all businesses are different and 0:03:48.400 --> 0:03:51.880 some may only offer some benefits. So some might say, yep, cool, 0:03:51.920 --> 0:03:55.040 you can make additional super contributions, but you're not allowed 0:03:55.040 --> 0:03:56.920 to salary package a car or your phone or your 0:03:56.960 --> 0:03:58.960 laptop or whatever. And at the end of the day, 0:03:59.000 --> 0:04:01.520 it's actually an arrangement agreed upon by you and your 0:04:01.560 --> 0:04:05.880 employee generally before you start working, so it's not usually 0:04:05.960 --> 0:04:08.760 set out halfway through your employment. But you know, we 0:04:08.800 --> 0:04:12.320 can always renegotiate. We've listened to the Renegotiate your Salary 0:04:12.320 --> 0:04:14.720 podcasts before, and if you haven't, go back and listened 0:04:14.760 --> 0:04:17.560 to them. But once it's established, a set amount of 0:04:17.600 --> 0:04:20.400 your pre tax salary will be taken and then allocated 0:04:20.440 --> 0:04:23.120 to your chosen benefit for the course of whatever time 0:04:23.160 --> 0:04:26.320 period that you've both agreed to. Now, you don't necessarily 0:04:26.440 --> 0:04:28.760 have to do it before starting a new workplace. It's 0:04:28.800 --> 0:04:31.760 just best practice. But once you've established that package and 0:04:31.800 --> 0:04:34.400 what it can look like, the benefits will come from 0:04:34.440 --> 0:04:36.560 all future work rather than you're getting to claim and 0:04:36.640 --> 0:04:38.120 a crude leave payment, etc. 0:04:38.600 --> 0:04:40.600 Yeah. So that's if you've already started working at a 0:04:40.600 --> 0:04:43.360 place and you're like, Oh, salary packaging sounds nifty. I've 0:04:43.400 --> 0:04:45.599 got four weeks leave. I want to turn that into 0:04:45.600 --> 0:04:46.640 a car. That's not a vibe. 0:04:46.680 --> 0:04:50.760 That's not a vibe, that's not a thing that's entitlement starting. Okay, 0:04:50.760 --> 0:04:51.480 different story. 0:04:51.640 --> 0:04:54.360 So is this a thing that is accessible only for 0:04:54.440 --> 0:04:57.400 full timers or can part timers and casuals get involved? 0:04:57.480 --> 0:05:01.680 So, part timers can and casuals can certain circumstances, but 0:05:01.720 --> 0:05:03.880 they're honestly the best way to work out whether this 0:05:04.080 --> 0:05:05.159 is applicable to you. 0:05:05.400 --> 0:05:08.159 So talk to your employer or your HR department. Yeah, 0:05:08.240 --> 0:05:10.520 because it's going to be different for everyone, Absolutely it is. 0:05:10.920 --> 0:05:15.840 So you mentioned cars and devices before, What exactly can 0:05:15.960 --> 0:05:16.640 we ask for them? 0:05:16.680 --> 0:05:17.560 What can we package? Oh? 0:05:17.560 --> 0:05:19.719 My gosh, there are so many things you can package. 0:05:19.760 --> 0:05:22.960 You can literally package so much stuff. One super great, 0:05:23.040 --> 0:05:26.360 we're investing for our future too, aged care and disability 0:05:26.360 --> 0:05:29.200 costs for loved ones, so obviously not for you because 0:05:29.200 --> 0:05:34.400 you're currently working, car parking, childcare, clothing. You can get 0:05:34.480 --> 0:05:38.800 your income protection insurance, my friends. You can get financial advice, 0:05:39.880 --> 0:05:44.760 wild groceries, health insurance, premiums. You can organize holiday accommodation, 0:05:44.880 --> 0:05:48.640 and then you hire laptops, rates, rents, mortgage like literally 0:05:48.720 --> 0:05:51.240 your utilities bills. There are so many things you can 0:05:51.279 --> 0:05:55.480 salary package. But again I've just listed off this very 0:05:55.520 --> 0:05:59.320 attractive list. They're not all available to everybody. It's just 0:05:59.520 --> 0:06:01.320 different industries and sectors. 0:06:01.760 --> 0:06:05.839 Speaking of different industries and sectors, I read that the 0:06:05.839 --> 0:06:10.080 healthcare sector, maybe government sectors get a better deal. Here, 0:06:10.120 --> 0:06:11.839 can you flesh that out for me? 0:06:11.839 --> 0:06:15.320 We do get a pretty good deal. Workers in nonprofits 0:06:15.320 --> 0:06:17.880 slash charity and people who work in the public health system, 0:06:18.080 --> 0:06:21.320 they typically receive the best salary packaging benefits available, which 0:06:21.320 --> 0:06:25.040 is very nice, and they actually include things like paying 0:06:25.080 --> 0:06:28.160 your rent and packaging your rent and credit card expenses 0:06:28.200 --> 0:06:31.000 and mortgages and more. And the reason that that is 0:06:31.000 --> 0:06:34.800 actually available. Apart from being like a really nifty thing 0:06:34.920 --> 0:06:37.640 to do, is obviously that the government wants to make 0:06:37.720 --> 0:06:40.720 it really attractive to work in these spaces, so they 0:06:40.760 --> 0:06:43.840 give a whole heap of other benefits, which at the 0:06:43.920 --> 0:06:45.920 end of the day does make it even more attractive 0:06:45.920 --> 0:06:46.440 to work there. 0:06:46.520 --> 0:06:50.600 Absolutely. So in your line of biz, Vickid, do many 0:06:50.640 --> 0:06:53.120 of your clients opt for salary packaging? 0:06:53.720 --> 0:06:57.760 Com of them do. Yeah, It's actually very common, depends 0:06:57.800 --> 0:06:59.760 on what it is. So I've got a lot of 0:06:59.800 --> 0:07:02.520 clients who do work in healthcare. I've got doctors and nurses, 0:07:02.960 --> 0:07:05.840 or a few doctors and nurses, and some of them 0:07:05.920 --> 0:07:09.360 salary package. I've got some people who salary package their rent, 0:07:09.840 --> 0:07:12.200 some people whose salary package just like a food and 0:07:12.240 --> 0:07:15.680 beverage card. But there's certain rules and regulations, so I 0:07:15.800 --> 0:07:18.600 know that a couple of them can't get groceries, but 0:07:18.640 --> 0:07:20.840 they can go dine out at a restaurant. So it's 0:07:20.880 --> 0:07:23.920 going to be completely dependent on your rules and regulations 0:07:23.920 --> 0:07:27.040 for your industry and your salary packaging program. So I 0:07:27.040 --> 0:07:30.520 do apologize that I can't give you specifics. I wish 0:07:30.600 --> 0:07:33.920 I could, but alas I cannot. That's why this is 0:07:33.920 --> 0:07:37.840 a general advice podcast, Georgia. But also it's going to 0:07:37.880 --> 0:07:40.160 be just dependent on your employer as to what you 0:07:40.200 --> 0:07:42.840 can access or not. But the best thing is to 0:07:42.960 --> 0:07:46.280 literally just ask them and see how much advantage you 0:07:46.320 --> 0:07:48.680 can take of it. Essentially, like IRF, it is available 0:07:48.720 --> 0:07:51.280 to you and you can salary sacrifice your rent and 0:07:51.320 --> 0:07:53.440 you're not. My question is why on earth are you not? 0:07:53.960 --> 0:07:57.120 Yeah, because that kind of makes a lot of sense. Definitely, 0:07:57.200 --> 0:07:59.120 if you're paying rent anyway. 0:07:59.080 --> 0:08:01.560 I would actually prefer this and just say, hey, cool, 0:08:02.200 --> 0:08:05.680 I get that it sounds really attractive and rah rah, 0:08:05.840 --> 0:08:09.600 but I would only be salary sacrificing sure thing costs, 0:08:09.680 --> 0:08:12.800 so like rent and you know, food and beverage costs, 0:08:13.080 --> 0:08:15.520 because I have seen a couple of people go, oh, like, 0:08:15.600 --> 0:08:17.880 I put heaps on a food and beverage card and 0:08:17.920 --> 0:08:20.560 now I spend more going out for dinner because they 0:08:20.560 --> 0:08:23.840 can only spend it. Yeah, And therefore it's actually not 0:08:23.960 --> 0:08:26.480 a good financial decision for them, But it sounded like 0:08:26.520 --> 0:08:28.360 a good idea at the time because obviously it's a 0:08:28.400 --> 0:08:31.320 tax effective and they feel like because at the end 0:08:31.320 --> 0:08:32.800 of the day, if I gave you like a card 0:08:32.840 --> 0:08:35.600 George and said, hey, each each week there's two hundred 0:08:35.640 --> 0:08:37.360 bucks on here and you have to spend it out, 0:08:37.679 --> 0:08:40.040 you'd feel like it's free money as opposed to you 0:08:40.080 --> 0:08:43.160 definitely come. And I think the mentality around that just 0:08:43.200 --> 0:08:45.360 needs to settle a little bit, because we need to 0:08:45.360 --> 0:08:48.000 be making the right financial decisions for us, not just going, 0:08:48.120 --> 0:08:50.320 oh my gosh, I can salary package and get thirty 0:08:50.360 --> 0:08:51.720 percent off of all whatever. 0:08:51.920 --> 0:08:52.199 Yeah. 0:08:52.280 --> 0:08:55.360 Yeah, and I think that, yeah, it's not always the 0:08:55.400 --> 0:08:58.840 best financial decision. But if you're salary packaging, sure thing costs, 0:08:58.880 --> 0:09:01.240 like you're actually paying your mortgage or your rent, or 0:09:01.280 --> 0:09:04.240 your bills or things that actually have to happen. Great. 0:09:04.760 --> 0:09:06.640 I also see people slip down a little bit of 0:09:06.679 --> 0:09:08.760 a slippery slope when they're like, oh, salary package a 0:09:08.800 --> 0:09:10.800 brand new car, and then they get a more expensive 0:09:10.880 --> 0:09:13.200 car because they feel like they're getting more value. And 0:09:13.240 --> 0:09:15.320 that's also a slippery slope that I don't want you 0:09:15.320 --> 0:09:16.520 guys to slide down. 0:09:16.720 --> 0:09:20.319 Yes, okay, no sliding down there. But as I mentioned 0:09:20.440 --> 0:09:24.800 at the top, you often say that paying tax is 0:09:25.120 --> 0:09:28.880 a privilege and the more tax we pay it's kind 0:09:28.920 --> 0:09:31.960 of a good thing. Can you explain that logic again 0:09:32.000 --> 0:09:33.640 for anyone who's new to the show. 0:09:33.440 --> 0:09:35.920 And honestly, it just makes us feel good. 0:09:36.160 --> 0:09:37.360 Yeah. 0:09:37.480 --> 0:09:41.240 Look, it's probably not the most common mindset that exists, 0:09:41.280 --> 0:09:43.720 but at the end of the day, it is the baseline, 0:09:44.000 --> 0:09:47.199 and it is not something that was surprised to you. 0:09:47.200 --> 0:09:49.040 You didn't go and get a job and then find 0:09:49.040 --> 0:09:51.240 out later that you had to pay tax. This has 0:09:51.320 --> 0:09:53.920 always been the standard, and I think that we need 0:09:53.960 --> 0:09:56.760 to start seeing our take home pay as our take 0:09:56.760 --> 0:09:58.959 home pay and instead of going, oh, well, I earn 0:09:59.040 --> 0:10:01.520 sixty five thousand dollars, it's like, well, I get that 0:10:01.600 --> 0:10:03.320 you earn that, but that is not how much you 0:10:03.360 --> 0:10:05.640 take home. And I think we really need to reset 0:10:05.760 --> 0:10:08.200 this frame of mind that that's what you were owed, 0:10:08.320 --> 0:10:10.480 because it feels a little bit entitled. And I know 0:10:10.520 --> 0:10:13.800 that I'm probably being quite opinionated and potentially rubbing people 0:10:13.840 --> 0:10:17.120 the wrong way, but I feel incredibly lucky to live 0:10:17.160 --> 0:10:20.080 in Australia, like we have so many privileges that are 0:10:20.120 --> 0:10:22.680 afforded to not many people across the rest of the world. 0:10:22.880 --> 0:10:26.040 We live in this beautiful country. We have beautiful services 0:10:26.040 --> 0:10:29.800 and incredible health care that we have access to for free. 0:10:29.840 --> 0:10:32.600 We have roads that are safe to drive on, we 0:10:32.720 --> 0:10:35.400 have police, they'll look after us. Like, I know that 0:10:35.480 --> 0:10:37.160 a lot of people are going to be like, oh, tax, 0:10:37.320 --> 0:10:40.679 like it's stooged. Yeah, Like I get that frame of mind, 0:10:40.720 --> 0:10:43.000 but at the end of the day, tax isn't going anywhere. 0:10:43.240 --> 0:10:45.480 And I think what we need to do is shift 0:10:45.520 --> 0:10:49.000 our mindsets to one of being grateful rather than being 0:10:49.120 --> 0:10:52.840 expectant that you know, people owe you something like we 0:10:53.000 --> 0:10:55.480 are so lucky to live in this country and to 0:10:55.679 --> 0:10:59.040 have such a beautiful lifestyle. And at the same time, 0:10:59.320 --> 0:11:03.080 a lot of us might have experienced poverty or disadvantage 0:11:03.200 --> 0:11:06.760 or you know, so much growing up, but not ever 0:11:06.920 --> 0:11:10.320 in comparison to what happens overseas, like there is no 0:11:10.480 --> 0:11:12.880 support system in a lot of other countries. And I 0:11:12.880 --> 0:11:15.600 think that, you know, I just feel very lucky to 0:11:15.640 --> 0:11:18.240 be paying taxes. And the more tax you pay, back 0:11:18.240 --> 0:11:21.280 to your question, Georgia, just means the more you're earning. 0:11:21.559 --> 0:11:23.880 Now that's something you should be grateful for too, Like 0:11:23.920 --> 0:11:28.040 the higher your taxable income, the better your lifestyle arguably, 0:11:28.200 --> 0:11:30.840 and the more money that's actually coming into your back pocket. 0:11:31.080 --> 0:11:33.360 And I think that the tax system tries to be 0:11:33.760 --> 0:11:35.679 really fair, and I know that there are a lot 0:11:35.679 --> 0:11:37.400 of things that a lot of people don't agree with. 0:11:37.440 --> 0:11:38.839 And please don't get me wrong, there are a lot 0:11:38.840 --> 0:11:41.520 of things that I don't love about it. But I 0:11:41.600 --> 0:11:43.959 do think that we, you know, live in a country 0:11:44.000 --> 0:11:46.199 where we just need to be really grateful for it. 0:11:46.240 --> 0:11:48.280 And I think that if we can shift our mindset, 0:11:48.600 --> 0:11:52.040 it actually helps us better than anybody else. Like we're 0:11:52.040 --> 0:11:54.880 not here going, oh my gosh, at O, I'm so grateful, 0:11:55.520 --> 0:11:57.880 Like no one's going to say that, but I just 0:11:57.920 --> 0:12:00.160 feel very lucky to be in a situation where I 0:12:00.200 --> 0:12:02.240 do earn money and I can give back to my 0:12:02.280 --> 0:12:03.520 community and my society. 0:12:03.600 --> 0:12:05.760 Yeah, that's it, isn't We're just lucky, do you? 0:12:05.960 --> 0:12:06.200 Yeah? 0:12:06.320 --> 0:12:09.160 No, that's a very good reminder. Now we will be 0:12:09.240 --> 0:12:12.320 back after a very short break to chat super fringe 0:12:12.320 --> 0:12:16.240 benefit tax and also the potential pitfalls of salary packaging, 0:12:16.320 --> 0:12:19.960 my friends, So please don't go anywhere so much to 0:12:29.160 --> 0:12:30.760 hello again, friends, We are back. 0:12:30.960 --> 0:12:32.719 Surprise, it's us, surprise. 0:12:33.480 --> 0:12:36.120 If you guys are loving the podcast today. 0:12:36.040 --> 0:12:38.600 Which obviously you should be obviously. 0:12:38.280 --> 0:12:41.920 Very welcome, don't forget that the podcast isn't the only 0:12:42.000 --> 0:12:46.400 place you can find us. We're also on Instagram, Facebook, YouTube, 0:12:46.600 --> 0:12:49.520 tiktop got a newsletter. How many people are in the 0:12:49.520 --> 0:12:50.360 Facebook group now? 0:12:50.360 --> 0:12:52.199 One hundred and fifty thousand people? 0:12:52.360 --> 0:12:53.440 Yeah, out of town. 0:12:53.559 --> 0:12:54.319 It's insane. 0:12:54.440 --> 0:12:56.480 Hey, Lucky, I feel like it was like two months 0:12:56.520 --> 0:12:59.160 ago that you did that little photo shoot with one hundred. 0:12:59.559 --> 0:13:02.439 Useless, fruitless photo shoot. Yeah, because it didn't get to 0:13:02.559 --> 0:13:05.080 reducta like redundant put it in the bin. 0:13:05.840 --> 0:13:09.199 Was cute though, it was cute. So join us there, guys, 0:13:09.240 --> 0:13:12.840 if you're not, they're all ready. But moving back into 0:13:12.880 --> 0:13:18.719 the show the chattin salary packaging today, So superinuation at 0:13:18.760 --> 0:13:21.040 its importance is something we do talk about a lot 0:13:21.120 --> 0:13:23.280 at cheese on the money because we are all about 0:13:23.600 --> 0:13:27.480 putting future you first tweet, So how can we use 0:13:27.520 --> 0:13:30.600 salary packaging to our benefit in that sense? 0:13:30.880 --> 0:13:34.640 All right, So salary sacrificing into super it's a mouthful, 0:13:35.080 --> 0:13:35.760 just get out. 0:13:35.920 --> 0:13:36.520 But it is. 0:13:36.440 --> 0:13:39.080 Definitely something to consider if you are trying to reduce 0:13:39.120 --> 0:13:41.560 your taxable income at the same time as trying to 0:13:41.559 --> 0:13:46.120 increase your retirement income. Genius, right, but also obviously only 0:13:46.160 --> 0:13:49.040 if this works for you personally. An example of how 0:13:49.040 --> 0:13:51.800 this works would be let's just say, for example, you 0:13:51.880 --> 0:13:55.480 earn seventy thousand dollars per year before tax. You could 0:13:55.480 --> 0:13:58.200 opt to put ten thousand dollars of that into SUPER 0:13:58.640 --> 0:14:02.199 and you'll then only pay income tax on sixty thousand 0:14:02.200 --> 0:14:05.320 dollars huge, which means your income would be reduced to 0:14:05.360 --> 0:14:09.000 sixty thousand dollars. But the benefit is you're paying less 0:14:09.040 --> 0:14:11.800 tax than your Super contributions are still taxed at fifteen 0:14:11.800 --> 0:14:14.840 percent instead of thirty two point five percent, which the 0:14:14.960 --> 0:14:18.120 average income earner would be paying anyway, which I think 0:14:18.240 --> 0:14:21.960 is hardly attractive. So to preface that, any contribution you 0:14:22.040 --> 0:14:25.160 make to superanuation up to that twenty five thousand dollars 0:14:25.160 --> 0:14:28.560 supernuation cap is going to be taxed at fifteen percent, 0:14:28.640 --> 0:14:31.760 so you can actually claim that later. So say you 0:14:31.880 --> 0:14:33.520 got that, And this is just me going on a 0:14:33.640 --> 0:14:36.640 sidetrack just to make sure that there's no confusion. So 0:14:36.720 --> 0:14:40.080 say you got extra money in your account and you're like, oh, 0:14:40.120 --> 0:14:43.160 actually I wish i'd put that into Super. You can. 0:14:43.480 --> 0:14:45.680 You can just transfer it over and a couple of 0:14:45.680 --> 0:14:48.240 weeks ago, and this isn't sponsored. Again, we're talking about 0:14:48.240 --> 0:14:51.360 bpay and being able to be pay additional super contributions 0:14:51.520 --> 0:14:54.800 into your superannuation fund which is kind of handy, but 0:14:55.120 --> 0:14:57.040 you can then claim it at tax time and get 0:14:57.040 --> 0:14:59.720 that difference between that fifteen percent and that thirty two 0:14:59.760 --> 0:15:03.200 points five percent back. Oh, so that's what happens at 0:15:03.240 --> 0:15:05.320 tax time, so that you end up in a good 0:15:05.360 --> 0:15:07.600 financial position, which is a bit of a money win. 0:15:07.640 --> 0:15:10.400 I think, huge money win. What's the twenty five thousand 0:15:10.440 --> 0:15:11.880 dollar cap? Is that per year? 0:15:12.080 --> 0:15:14.640 So that per year? Look, I will go into it 0:15:14.680 --> 0:15:17.720 in more detail on more super specific episodes, which I 0:15:17.760 --> 0:15:20.000 know you guys have been asking for, so let's get 0:15:20.000 --> 0:15:22.800 to them at some point. But essentially, you can contribute 0:15:22.840 --> 0:15:25.400 up to twenty five thousand dollars per year and make 0:15:25.520 --> 0:15:28.720 use of that fifteen percent tax guarantee. Do you do that? 0:15:29.120 --> 0:15:29.880 I don't do that. 0:15:30.200 --> 0:15:33.520 Why don't you contribute that twenty five k to Superman. 0:15:33.760 --> 0:15:36.720 Because I'm poor? No, that's absolutely not the answer. So 0:15:36.800 --> 0:15:39.840 the reason I don't is because, one don't. I just 0:15:39.840 --> 0:15:42.000 don't have that free cash flow at this point in 0:15:42.040 --> 0:15:45.200 my life. Yeah, I wish I did, but also at 0:15:45.200 --> 0:15:48.680 the moment, my focus is on creating an investment portfolio 0:15:48.680 --> 0:15:52.520 outside superannuation because I want to retire before sixty five. 0:15:52.600 --> 0:15:54.680 So as much as we talk about Super being really 0:15:54.680 --> 0:15:57.200 really great and it is honestly the closest thing that 0:15:57.240 --> 0:15:59.800 we have in Australia to a tax haven, which is 0:15:59.840 --> 0:16:02.800 a money win, and it is really great. I don't 0:16:02.840 --> 0:16:04.560 want to put my money in there, ye, because I 0:16:04.600 --> 0:16:08.120 can't access it until I'm sixty five. So I'm definitely 0:16:08.120 --> 0:16:11.040 contributing to Super, but at the rate that my income 0:16:11.120 --> 0:16:13.480 is at, which is relatively low at this point in time. 0:16:13.520 --> 0:16:15.600 If I'm brutally honest, because I keep putting all my 0:16:15.680 --> 0:16:18.160 money back into shees On Money to watch it grow. Yeah, 0:16:18.200 --> 0:16:20.920 but I think it's really important to note that I 0:16:20.960 --> 0:16:23.000 don't do that. But that's a personal choice and I'm 0:16:23.040 --> 0:16:25.400 happy to share that purely because I want you guys 0:16:25.480 --> 0:16:28.920 to know that even though these super attractive benefits exist, 0:16:29.200 --> 0:16:32.160 not everyone is making use of them for whatever reason 0:16:32.400 --> 0:16:33.880 that makes the most sense to them. 0:16:34.040 --> 0:16:35.840 Gotcha, that makes sense. 0:16:35.960 --> 0:16:38.280 But if you want to be contributing more to Super, 0:16:38.360 --> 0:16:40.200 and you see that as a really great way, like 0:16:40.280 --> 0:16:43.000 salary sacrificing is a fantastic way to make use of that, 0:16:43.080 --> 0:16:44.720 it is definitely something I want you to know. I 0:16:44.920 --> 0:16:47.560 want you to know you have access to so that 0:16:47.560 --> 0:16:49.200 if it does work for you, you can use it, 0:16:49.240 --> 0:16:50.960 because I would hate to think that you get to, 0:16:51.360 --> 0:16:53.320 you know, twenty or thirty years down the track and 0:16:53.320 --> 0:16:54.720 you be like, oh my gosh, I didn't even know 0:16:54.800 --> 0:16:56.720 I could do that. I wish I could have done that, 0:16:57.120 --> 0:16:59.320 and then I would be silly for not having shared 0:16:59.320 --> 0:17:01.880 it with you. Exactly now. 0:17:02.040 --> 0:17:05.679 Fringe Benefit tax b is something that bt BT. It 0:17:05.720 --> 0:17:08.680 came up a lot on my Google searches, as. 0:17:08.680 --> 0:17:10.760 Is it because you were googling fringe benefit tax. 0:17:10.840 --> 0:17:14.040 I was googling salary packaging right quite a few times. 0:17:14.640 --> 0:17:17.000 So what what is FBT? So? 0:17:17.119 --> 0:17:21.400 Fringe benefit tax is paid by employers on some benefits 0:17:21.440 --> 0:17:25.320 that they provide to their employees, so it's completely separate 0:17:25.359 --> 0:17:28.440 from your personal income tax, and the amount the employer 0:17:28.560 --> 0:17:31.720 will need to pay is calculated on the taxable value 0:17:31.760 --> 0:17:34.240 of the fringe benefit, So they need to pay a 0:17:34.320 --> 0:17:36.760 tax on the benefit that you get, which is why 0:17:36.800 --> 0:17:38.800 a lot of employeers are like, oh, I don't really 0:17:38.840 --> 0:17:41.920 know if I gotcha. I'm that keen on this benefit 0:17:41.920 --> 0:17:44.600 because it doesn't benefit me as well as you. But 0:17:44.760 --> 0:17:48.240 businesses who are providing fringe benefits can usually claim an 0:17:48.280 --> 0:17:51.480 income tax deduction on the cost and their FBT that 0:17:51.520 --> 0:17:54.560 they pay, so usually they can also claim GST credits too, 0:17:54.760 --> 0:17:56.760 so I'm not saying it doesn't equal out in the end, 0:17:56.840 --> 0:18:01.280 but there's just more drama associated with it in a way. Okay, Now, 0:18:01.320 --> 0:18:03.520 according to the atiers website, which I just had to 0:18:03.520 --> 0:18:05.520 look up because obviously I don't know what FET is 0:18:05.560 --> 0:18:06.960 off the top of my head, but like, let's get 0:18:07.000 --> 0:18:11.879 super specific, but examples of fringe benefits include allowing an 0:18:11.920 --> 0:18:15.159 employee to use a work car for private purposes, giving 0:18:15.160 --> 0:18:19.520 an employee a discounted loan, paying an employees gym membership, 0:18:19.560 --> 0:18:22.720 providing entertainment by way of free tickets to concerts or 0:18:22.800 --> 0:18:25.240 music festivals, et cetera, which would be nice, Sorry, Gar, 0:18:25.320 --> 0:18:29.280 haven't haven't hit that up for you, or reimbursing expenses 0:18:29.280 --> 0:18:33.000 incurred by employees, such as school fees, or giving benefits 0:18:33.080 --> 0:18:35.920 under a salary sacrifice arrangement with an employee. So that 0:18:35.960 --> 0:18:37.320 would just cover everything else. 0:18:37.400 --> 0:18:37.640 Yeah. 0:18:37.720 --> 0:18:41.160 The following things which are not fringe benefits though, are 0:18:41.240 --> 0:18:46.919 salaries and wages, share purchases under approved employee share acquisition schemes, 0:18:47.280 --> 0:18:52.200 employee contributions to complying super funds, employment termination payments, payments 0:18:52.200 --> 0:18:54.760 for the amount deemed to be dividends under div seven A, 0:18:55.040 --> 0:18:58.360 which you guys are just going to go seven A. Yeah, 0:18:58.440 --> 0:19:01.120 so it's division and seven A, which is a law. 0:19:01.160 --> 0:19:02.679 But we're not going to get into that because I 0:19:02.720 --> 0:19:05.520 just don't think you guys actually care too much. Like, 0:19:05.560 --> 0:19:08.919 I've found this stuff, and now you know what I 0:19:08.960 --> 0:19:11.359 want you to take from this. If you want to 0:19:11.400 --> 0:19:14.320