Salary Packaging Policy

Purpose

To allow remuneration flexibility for eligible staff to receive at least part of their salary in a form other than take home pay if they wish to do so.

To provide benefits which allow an eligible staff member to either purchase items or pay for particular items in a more tax-effective manner than if they just paid for those items from their after tax income.

To provide staff the flexibility to request a combination of cash salary and benefits to suit their individual and personal needs and provides an opportunity to increase disposable income.

Scope

This policy applies to continuing, fixed term and casual and sessional staff employed by Monash University Australia.

Policy Statement

Monash University aspires to be an employer of choice for current and prospective staff. The University recognises that staff need to have access to flexible remuneration planning which better suit their individual needs and financial circumstances. Salary sacrificing is one way to provide this flexibility. The University has implemented Salary Packaging to provide a financial benefit to the staff and also as a recruitment and retention strategy. The following rationale underpins the salary packaging provision within Monash University:

The University's Salary Packaging Policy and practices are guided by the provisions of the Fringe Benefit Tax, Tax Office Rulings, Superannuation Legislation and other relevant Australian legislation and certified agreements and will be modified from time to time to maintain alignment with the changes to the legislation.
Continuing and fixed term staff are able to salary package the full range of benefits offered by the University, however Monash may exercise its discretion to limit the extent of packaging available to staff with contracts of less than 12 months, depending on the items requested to be packaged.
Salary packaging is not mandatory. Staff are free to negotiate only for those benefits that best satisfy their financial and personal needs from the list of benefits offered by the University. Alternatively a staff member may continue to take 100% of his/her remuneration in the form of normal cash salary and compulsory superannuation.
Any staff eligible for performance bonuses or any other type of lump sum payments may also request that such payments be packaged. Packaging in these circumstances will be limited to superannuation contributions only provided arrangements have been made to salary package these payments before they accrue their entitlement to receive such payments.
Casual and sessional staff will be eligible to salary package voluntary contributions into UniSuper Accumulation Account only.
There is an administration fee associated with salary packaging of most benefits which is reviewed from time to time and adjusted.
The benefit items that are available for salary packaging purposes are limited to those items that are totally exempt from the payment of Fringe Benefits Tax (FBT) or those that are concessionally taxed (novated leasing of motor vehicles). Benefits that are able to be claimed as an income tax deduction are not available for salary packaging (with some noted exceptions) as there is no tax advantage to this arrangement.
All arrangements for commencing or ceasing salary packaging of benefits must be prospective and not retrospective.
The University will always decide the salary and benefits to be made available to staff.
The cost of a staff member's remuneration package should be no more than the total cost of employment prior to salary packaging occurring. In the event of any increase in taxation payable by the University, including FBT or any state tax equivalent, the University will pass on such costs to the staff member.
The University does not impose a limit on the amount that can be Salary Packaged.
Salary packaging is only available to staff members who are covered by a certified agreement.
The Australian Taxation Office has, for a number of years, accepted remuneration packaging arrangements as a bona fide way of remunerating staff. However, should there be any legislative changes in the future in relation to salary packaging, the University reserves the right to make alterations to the salary packaging policies and procedures which currently apply (as stated in this policy or the Salary Packaging Procedure).
The University strongly encourages staff to seek independent financial advice on all financial aspects of salary packaging prior to participating in the program.

Staff members contemplating participating in the salary packaging are strongly advised to read the policy and the supporting procedures carefully.

Procedure Title

Salary Packaging Procedure

Responsibility for Implementation

Divisional Director, Monash HR

Policy Status

Revised

Key Stakeholders

VCG
VP Administration

Approval Body

VCG

Endorsement Body

N/A

Definitions

Key word or acronym	Definition
ATO	Australian Taxation Office
Adjusted Taxable Income	Superannuation surcharge is based on a staff member's Adjusted Taxable Income which is generally made up of your taxable income plus employer and salary sacrifice superannuation contributions plus reportable fringe benefits amount. A portion of some termination payments paid by the employer is also included.
Benefits	Any non-cash benefit and cash payment (other than salary) made or expected to be made for the benefit of the staff member and cash payment made or expected to be made to the staff member by way of reimbursement of expenses incurred by the staff member
Fringe Benefits Tax (FBT)	Tax payable by the University to the Commonwealth on some categories of benefits provided to staff members
FBT Year	Runs from 1 April to 31 March.
Otherwise deductible	A legitimate expense incurred in the course of earning assessable income which could otherwise be claimed by the staff member at the time of submitting an income tax return if not salary packaging.
PAYG	'Pay As You Go' taxation
Remuneration	Salary plus benefits
Package	Salary assigned to the permanently occupied position that the staff member is entitled to receive under an agreement or contract of employment with the University expressed as an annual sum. At the discretion of the University, the package may be increased by the addition of other remuneration approved for packaging from time to time by the University.
Package Commencement Date	The date the staff member's salary and benefits commence.
Package Year	Starts from the package commencement date and runs for one year.
Salary	Remuneration in accordance with relevant workplace agreement paid by way of regular periodical cash payments subject to PAYG tax.
Salary Sacrifice	Allocating an amount of money to be deducted from gross earnings before PAYG tax deductions are calculated.
Total Employment Cost (TEC)	The University's annual budgeted cost as determined from time to time by the University, of providing the staff member's total package as salary. In the event there is a cost reduction as a result of the staff member receiving benefits rather than salary, the saving is treated as additional salary but is not taken into account for superannuation purposes other than for fulfilling the university's Superannuation Guarantee obligations.

Related Legislation

Income Tax Assessment Act 1936 and 1997;
Fringe Benefits Tax Assessment Act 1986;
Superannuation Industry (Supervision) Act;
Taxation Laws Amendment Act (No 8) 2000; and
Australian Taxation Office Guidelines.