Salary Sacrifice to PPOR mortgage.

M

moyjos

Was just reading on another forum about a lady who salary sacrifices to her mortgage?

"I am lucky Im frugal mostly and I can salary sacrifice to my mortgage the max you are allowed $300 per week so pay no tax so dont miss it
I love salary sacrifice "

I didn't think you could do this?? Is there a smart accountant that can clarify this?? (My accountant isn't back at work until the 10th of Jan)
 
When you work for some organisations (government, charities, hospitals), then it's possible.

But then you generally get payed less than in a private firm, so your tax saving is probably more than offset by lost income. Some extra benefits are offered to cover this fact, and entice people into these sectors.
 
After a bit of 'Googling' (saw this thread and thought - I gotta get in on this!) it looks like this might only be available to people working in certain industries. Perhaps, as moyjos has noted, there might be an accountant perusing these forums who could clarify? (sounds like a good deal if you can get it anyhow)
 
porp_e said:
After a bit of 'Googling' (saw this thread and thought - I gotta get in on this!) it looks like this might only be available to people working in certain industries. Perhaps, as moyjos has noted, there might be an accountant perusing these forums who could clarify? (sounds like a good deal if you can get it anyhow)
Click to expand...

:) yeah I have been Googling too and it seems like only certain industries. :( bugger
 
The organisation I work for is classed as a charity and I have been doing this for several years now.
Took a lot of convincing me that it was legal, I thought there had to be a catch,but no it's perfectly above board.
 
I work 4 hours per week for a Community Centre. As soon as I found out they had the classification for salary sacrifice I asked if I could sacrifice my entrie (tiny) pay. Unfortunately they only allow this for full time workers.:(
 
Qld health allows this, it saves quite a considerable amount of tax, although there are yearly limits for the amount you can sacrifice

Ben
 
Yes I can salary sacrifice, and yes it is one of several things I do is my mortgage. It is only a minimum amount as mortgage has a FBT component. It does depend on if your employer allows salary sacrifice and they detemine just what you can sacrifice.
 
It can also depend on where you are living as well, up in Port Hedland its classed as a remote area A where i live and I'm pretty sure that you can have your mortgage interest repayments or rent salary sacrificed through your company if you ask.. i haven't checked with my company because they just pay my full repayments as a part of the deal anyway but i can find out..

kevy
 
moyjos said:
Was just reading on another forum about a lady who salary sacrifices to her mortgage?

"I am lucky Im frugal mostly and I can salary sacrifice to my mortgage the max you are allowed $300 per week so pay no tax so dont miss it
I love salary sacrifice "

I didn't think you could do this?? Is there a smart accountant that can clarify this?? (My accountant isn't back at work until the 10th of Jan)
Click to expand...

if you work for a public benevolent institution (PBI) (health, charity etc) you can sacrifice cash income and receive non salary benefits to a third party (eg mortgage, car lease, credit card etc). the sacrifice amount can not currently exceed 308pw before the employer pays fringe benefits tax (which they're not going to do). these are reportable fringe benefits recorded on the group certificate.

a max allowable fringe benefit of 16k 'grosses up' to 30k. so 30k will be added to your taxable income when accessing some things, like hecs repayments and family tax benefits.
 
Skilgannon said:
It can also depend on where you are living as well, up in Port Hedland its classed as a remote area A where i live and I'm pretty sure that you can have your mortgage interest repayments or rent salary sacrificed through your company if you ask.. i haven't checked with my company because they just pay my full repayments as a part of the deal anyway but i can find out..

kevy
Click to expand...

the zone offset is different from what is being discussed here.

zonal (where you mostly live) rebates/offsets are a direct deduction of tax payable from the bottom line.
 
If you live in a remote area you get a 50% discount when you salsac your home mortgage's interest (or rent) if you work for a PBI. So you can salsac just over $600pw (double $300 which others are allowed). People can have trouble convincing banks to recognize it (at its true value which is obviously much higher than the same amount of gross income as no tax) can be a problem though. My broker friend has told me sometimes they want a letter from employer saying you can cancel the salsac at anytime. Banks are idiots why on earth would they want you to be able to cancel something that increases your net income by several $100 per week?

I should add it is good to get one small advantage from the Govt for being in a remote area, we get so ripped off in so many other areas especially tax.

Cheers

Smallbuyer
 
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Those employers that let you SS your mortgage let you SS many other things as well as long as you're not double dipping ie. loans attached to an offset, super plans not part of an old pension or lump sum plan.

I SS my school fees and intend to add utility bills to make up the difference now that my eldest has left schoool, but qualify doubling my SS amount if I do it with super (but don't as I a have an old plan and don't want to start another). All up this can amount to around 20K.
 
bluestorm said:
When you work for some organisations (government, charities, hospitals), then it's possible.

But then you generally get payed less than in a private firm, so your tax saving is probably more than offset by lost income. Some extra benefits are offered to cover this fact, and entice people into these sectors.
Click to expand...

It's not only "salary sacrificing" in the case of hospitals - my wife is a nurse.

They also have what is called "salary packaging", which is totally different.

How it works is the Gubbmint allows these certain industries to deduct a portion of their income from their gross before tax.

Then, they are taxed on the remainder.

Basically, someone who is earning $1000 per week will be taxed on whatever the maximum allowance is per year, divided by 52 weeks. So, on a grand per week you might get taxed on only $750 per week for example..

The money that is non-taxed must be allocated to some form of weekly/monthly cost of living such as rent, mortgage, credit card (this is what we do) etc.

The benefit of it all is that to earn this amount of money AFTER tax in the normal circumstances would mean you are having to earn a fair bit more (gross) to get the same nett you enjoy from the salary packaging.

It's sort of like a hidden pay rise. ;)
 
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BayView said:
It's not only "salary sacrificing" in the case of hospitals - my wife is a nurse.

They also have what is called "salary packaging", which is totally different.

How it works is the Gubbmint allows these certain industries to deduct a portion of their income from their gross before tax.

Then, they are taxed on the remainder.
Click to expand...

I thought that was how both slary packaing and salary scarificing worked (?)

EG... John earns $100k gross income, John then salary sacriices $5k to super.... leaving $95k taxable income which is then subject to income tax

or

John earns $100k gross income, John then salary packages $5k for mortgage payments.. leaving $95k taxable income which is then subject to income tax

(?)
 
this sounds very interesting and will look into it further when I finish with holidays and get back to work.

But for now just a couple of quick question as I am trying to get my head around this concept.

I hear people saying they salary sacrifice their IP interest repayments. But isn't this the same as claiming negative gearing at end of financial year. Is it possible to salary sacrifice interest repayments AND also claim negative gearing at tax time. Wouldn't this be considered double dipping.

Also, how can I find out what can be salary sacrificed. Could I do my rent, groceries, furniture,...... I mean, what is the criteria for a purchased item to be considered for salary sacrificing.

thanks in advanced for replies
 
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