SALARY PACKAGING CALCULATOR

A salary packaging plan tailored to your needs can unlock novated or associate car leases, professional memberships, home office expenses, and income protection insurance. But how does it work, and why should you consider using a salary packaging calculator? This guide answers common questions about salary packaging and explains how SDP Solutions’ salary savings calculator can help you achieve financial clarity.

What is Salary Packaging?

Salary packaging, also known as salary sacrifice, allows employees to allocate a portion of their pre-tax income toward specific expenses. This reduces taxable income and potentially increases net take-home pay. Common items that can be packaged include superannuation contributions, car leases, and professional expenses.

Why Should I Use a Salary Packaging Calculator?

A salary packaging calculator, or salary savings calculator, helps you estimate the potential financial benefits of salary packaging. It enables you to understand the impact of salary packaging on your income and assess whether this approach suits your financial goals.

With SDP Solutions’ salary packaging calculator, you can:

• Explore different salary packaging scenarios.
• Compare your take-home pay before and after packaging.
• Identify opportunities to reduce tax.

How Does the SDP Solutions Salary Packaging Calculator Work?

The salary savings calculator shows potential take-home pay improvements by letting you input key details about your income and expenses. Here’s an overview of the key steps:

1. Enter Your Rate of Pay: Provide your hourly or daily rate and specify how many hours or days you work each week. This forms the foundation for calculating your gross earnings.
2. Include Professional Expenses: Input any work-related costs, such as home office expenses, professional memberships, or self-education costs.
3. Specify Living Away From Home Allowance (LAFHA): If you live and work 135 km or more from your usual place of residence, you may be eligible for LAFHA, which can significantly boost your savings.
4. Add Car Expenses: Include details about novated leases or any plans to package a vehicle.
5. Account for Salary Sacrifice to Superannuation: Superannuation contributions are another effective way to reduce taxable income while building your retirement savings.

The tool then provides a detailed breakdown of your financial situation with and without salary packaging, highlighting the potential savings.

What Expenses Can I Include in Salary Packaging?

Salary packaging offers flexibility to include a range of expenses. Here are some examples:

• Work-Related Costs: Stationery, subscriptions, and income protection insurance.
• Car Costs: Lease payments, maintenance, and fuel (via a novated lease).
• Superannuation Contributions: Additional contributions to your super fund.
• Living Expenses: Rent (for those eligible for LAFHA).

What is a Novated Lease, and Why is it Popular for Salary Packaging?

A novated lease is a three-way agreement between you, your employer, and a leasing company. It allows you to salary package a car, with payments made from your pre-tax income.

The SDP Solutions salary packaging calculator for car expenses makes it easy to evaluate whether a novated lease fits your financial situation. Simply input the car’s value and other relevant details to see the potential savings.

Who is Eligible for LAFHA?

Living Away From Home Allowance (LAFHA) is a tax concession for employees who relocate for work and meet specific conditions. To be eligible, you must:

• Be an Australian resident.
• Live and work at least 135 km away from your usual residence.
• Incur rental costs at your temporary location.

If you qualify, LAFHA can significantly reduce your taxable income. The calculator helps you determine your eligibility and calculate the savings.

How Can Salary Packaging Boost My Superannuation?

Salary packaging superannuation contributions allows you to grow your retirement savings while lowering your taxable income. These contributions are taxed at a concessional rate of 15%, often lower than your marginal tax rate.

For example, if you earn $100,000 per year and package $10,000 to your super, the tax savings could be substantial. The calculator lets you model this scenario to see the exact benefits.

What Makes SDP Solutions’ Calculator Unique?

Unlike generic salary packaging tools, SDP Solutions’ calculator is tailored to Australian tax rules and salary packaging options. Key benefits include:

• Customisation: Input specific expenses and salary details for personalised results.
• Comprehensive Reporting: See detailed breakdowns of your taxable income, tax payable, and total savings.
• Ease of Use: The intuitive interface guides you through the process step-by-step.

How Accurate Are the Results from the Calculator?

Results are based on the information you provide and may not reflect unique circumstances or changes in tax laws. For tailored advice, consider consulting an SDP Solutions expert.

What Are the Key Metrics the Calculator Highlights?

After entering your details, the salary packaging calculator generates a detailed report, including:

• Gross billing
• Packaged expenses claimed from pre-tax income
• Taxable amount
• Tax payable
• Net take-home pay
• Total superannuation
• Annual savings after SDP Solutions’ fee

How Do I Access My Results?

Once you’ve completed the calculation, you can choose to receive the results via email. This allows you to review and compare scenarios at your convenience. You’ll also have the option to contact SDP Solutions for a free consultation to discuss your salary packaging benefits.

How Does Salary Packaging Impact My Tax Return?

Salary packaging affects your taxable income but doesn’t eliminate the need for an annual tax return. Packaged expenses are deducted before tax, potentially lowering your income tax liability. However, certain benefits, such as novated leases, may be subject to Fringe Benefits Tax (FBT). The calculator accounts for these factors to further refine estimates.

What Are the Next Steps After Using the Calculator?

Using the calculator is the first step toward smarter financial planning. Here’s what to do next:

1. Review Your Results: Understand the savings and benefits presented by the calculator.
2. Consult SDP Solutions: Our experts can guide you through the salary packaging process and ensure compliance with tax regulations.
3. Implement Your Salary Packaging Plan: Work with your employer to update your payroll arrangements.

Is Salary Packaging Right for You?

Salary packaging isn’t one-size-fits-all—it depends on your financial situation, goals, and eligibility for specific benefits. SDP Solutions’ salary packaging calculator is a practical, easy-to-use tool to help you make informed decisions. Whether you’re considering a novated lease, LAFHA, or superannuation contributions, this calculator simplifies the process and highlights potential savings.