Helping Not-For-Profit Workers

Salary sacrificing or salary packaging is an arrangement where an NFP employee’s total remuneration package is part cash and part benefits (e.g., extra superannuation contributions, flexible working arrangements or a lower taxable income). It’s a great way to save money on tax, and many employers offer salary sacrificing arrangements as part of their employee benefits package.

Salary sacrificing allows you to use part of your pre-tax salary to pay for certain expenses like super contributions, mortgage repayments, car loans, child care spending, and health insurance. As the ATO explains, salary sacrificing “is an arrangement between an employer and an employee, where the employee agrees to forgo part of their future entitlement to salary or wages. This is in return for the employer providing them with benefits of a similar value.”

Yes. Mortgage repayments and rent can be salary packaged. You can also salary package other regular fixed amount expenses like school fees and loan payments. Note that each non profit organisation has their own policy about salary sacrificing so make sure to take this up with your HR or payroll department.

 It can help you save on tax. Your mortgage repayments are deducted from your pre-tax income, which results in a reduced income as far as computing taxes is concerned. So when you salary sacrifice your mortgage, you’re essentially reducing your taxable income which helps you save quite a bit of money in taxes each year.

Another benefit is that it can help you get ahead on your mortgage, which can reduce the amount of time it takes to pay it off by making extra repayments with your extra income in your pay packet.

Some lenders may count your salary sacrifices as an expense, which can reduce how much they are willing to lend you. To know more, best to talk to a mortgage broker specialising in home loans for non profit workers.