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Frequently Asked Questions1. What is salary packaging? Salary packaging is a voluntary scheme which allows staff to take their remuneration in a form other than "take home pay". They can request a combination of cash salary and limited remuneration benefits to suit their individual and personal needs which may provide an opportunity to increase disposable income. 2. Who can apply for salary packaging? Is it only beneficial to high income earners? All tenured/tenurable and permanent staff and staff with a fixed-term contract of 12 months or more may participate. Casual staff and those on contracts for less than 12 months are not eligible to apply. Fixed-term contract staff who wish to lease a motor vehicle must have a contract of appointment for longer than the motor vehicle lease period. In general, higher income earners will benefit more as they have a higher marginal tax rate. However, the benefits of salary packaging will vary in each individual case and should be assessed properly by your financial advisor before you enter into a packaging arrangement. 3. What are the benefits in salary packaging? Employer-provided benefits are treated differently from gross salary under the taxation system, therefore, staff who package some of their gross salary and have the University of Adelaide pay for some of their expenses may be financially better off depending on the benefits packaged and the fringe benefits tax payable. The benefits of salary packaging (if any) vary for each individual and should be assessed by your accountant or financial advisor. Some of the benefits of salary packaging to staff include:
4. How much of my salary can I package? You must retain 60% of your superannuable fortnightly gross salary after deduction of all pre-tax items (i.e. you can package up to 40%) unless approved otherwise by the Director, Human Resources. 5. Why can't I package more than 40% of my salary? This is to ensure that you do not suffer undue hardship when unexpected expenses or a change in lifestyle occur. 6. What items can be packaged? Superannuation, motor vehicle lease, child care fees for the North Terrace and Waite campus University of Adelaide Child Care Centres and the Roseworthy Campus Child Care Centre; Car Parking Fees for University of Adelaide Car Parking Permit holders; Portable Electronic Devices and Living Away From Home Allowances are the only items that may be packaged. 7. Will this list of items be extended in the future? This will depend upon prevailing taxation legislation and cost benefit factors. The University will continue to canvass favourable options to staff. 8. Why aren't any other items offered for packaging? Other items (e.g. health insurance) are not FBT-exempt. Salary packaging is generally not attractive to staff when Fringe Benefits Tax, at the equivalent rate of 48.5% Income Tax, has to be charged. 9. Can I salary package to other superannuation funds? No - The Super SA Scheme in which some employees participate is now 'frozen' and has no provision for salary packaging in their Deed. Staff in these schemes who wish to package voluntary contributions may do so to the UniSuper Award Plus Plan (formerly TESS). Private superannuation funds are also excluded. 10. What administrative costs will I have to pay to participate in salary packaging? There will be no charge for packaging superannuation contributions provided that fixed amount deductions are not changed for 12 months (the agreed term) and the arrangement is not abused. An amount of $50 (pre-tax) may be charged for changes initiated by staff during a package term. The administration cost of $260 per annum ($10 per pay) inclusive of any government taxes will be charged for motor vehicle novated leases to defray the costs of administration, reconciliation and FBT/GST accounting. This will be processed as a pre-tax deduction from salary each fortnight. The administration cost of $260 per annum ($10 per pay) will be charged for salary packaging a Living Away From Home Allowance to defray the costs of administration, reconciliation and FBT/GST accounting. This will be processed as a pre-tax deduction from salary each fortnight. A "change to deduction" administration charge of $130 (pre-tax) will be made for staff-initiated changes during a motor vehicle lease term. Any other out-of-pocket expenses incurred by the University with regard to changes to packaging arrangements during a package term will be passed on to the employee. An administration cost charge of $130 per annum ($5 per pay) will apply for salary packaging Child Care fees and will be processed as a pre-tax deduction from salary each fortnight. An additional one-off administration charge of $50 pre-tax will be made for changes initiated by a staff member to Child Care fees during the 12 month package term. Administration cost charges, where applicable, are cumulative and the University reserves the right to vary the level with appropriate notice. 11. Can I change my package? How often? Superannuation and child care fees can be changed once every 12 months from the start of the first deduction without charge. A motor vehicle fixed-term lease is usually 3-4 years. Only those changes negotiated with and agreed by Custom Fleet may be processed. A change during the lease term will attract an administration cost charge of $130 for motor vehicle and $50 for superannuation and child care fees which will be a pre-tax deduction. These are cumulative with other charges. 12. Why can't I change my salary packaging arrangement more than once a year? It is commercial custom and practice to have a packaging arrangement in place for a minimum of 12 months. Changes are labour-intensive to administer since they require almost as much administrative effort as the initial set-up. 13. What happens when I'm on annual or long service leave or leave without pay? Deductions will continue to be made and benefits provided whilst on paid absence. If you are on leave without pay and therefore not receiving salary, you will need to arrange payments from your own resources (after tax) for this period for a motor vehicle lease or child care fees. For superannuation, you should contact the Human Resources Service Centre on extension 31111 for available options before your leave without pay commences. For child care fees you should contact the Director, University Child Care Centres North Terrace and Waite campus on extension 36560, or the Director, Roseworthy Campus Child Care Centre on extension 37895. 14. What are the traps in salary packaging?
It is for these reasons that you are advised to seek professional financial advice before committing yourself to a salary packaging arrangement (see question 16). 15. Will voluntary pre-tax contributions increase my superannuation account faster than after-tax contributions? No. If you contribute $100 from pre-tax pay, UniSuper will deduct 15% contributions tax and 2% administration charge and $83 will go to the superannuation account. You would need to increase your pre-tax contribution to $120 to achieve a $100 net contribution to the superannuation account. (The calculation, rounded to nearest dollar, for this is: $100/.83 x 1=$120.) $100 contributed from after-tax pay will go straight into the member's account without reduction. 16. Where should I go for financial advice? You are strongly urged to seek external professional financial advice before you enter into a salary packaging arrangement. The University cannot recommend any particular financial organisation. A directory of financial advisors is available from the Financial Planning Association on 1800 337 301 or visit their website. Other organisations which are known to the University and offer financial planning services are:
17. What happens if I leave the University of Adelaide? If there are any unpaid amounts owing, they will be deducted as full pay period amounts from your final salary and leave entitlements. Superannuation and child care fees will cease with termination of employment. If you have a Motor Vehicle Novated Lease, the Novation agreement with the University of Adelaide ceases on termination of employment. You must contact Custom Fleet for arrangements regarding your leased vehicle as soon as possible and before your termination becomes effective. Any outstanding amounts after termination must be paid by you directly to Custom Fleet. 18. Who should I contact if I want more information on salary packaging?
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