Are you aware that being employed by a Non-Profit organization can result in cost savings?

The job of not-for-profit employees offers a major financial advantage in terms of salary packaging. By entering into salary sacrifice agreements with their employers, these employees are able to boost their income by using pre-tax funds to cover specific expenses. 

Employees of Not for Profit (NFP) organizations are entitled to receive enhanced discounts and exemptions from costs that are not accessible to employees in the private sector.

Non-profit organizations with philanthropic goals operate on limited budgets and have limited financial resources in comparison to private companies. As a result, offering cash incentives may not always be feasible.

Nevertheless, salary packaging offers a chance for non-profit organizations to offer employee incentives without using funds meant for charitable purposes.

According to the Australian Charities and Not-for-profits Commission (ACNC), there are approximately 600,000 organizations that operate as not-for-profit entities in Australia. These charities play a significant role in the economy of the country. Employees of these organizations have the option to utilize a salary packaging system to maximize the benefits of their earnings.

For those employed in a non-profit organization or seeking to enter the field, there are salary packaging advantages available.

What is the Salary Package for an Employee in a Not-for-Profit Organization?

Typically, employees working for not-for-profit organizations have their income tax deducted from their salary prior to receiving it.

Even though a salary package does not alter the total amount of your salary, employees are responsible for covering certain living expenses before they are subject to taxes. These expenses are ones that they would have paid after taxes anyway.

After both you and your employer have given your approval, a portion of your salary will be allocated towards pre-tax funds that can be used for everyday living expenses. There will be no taxes applied to this amount and it will not incur any extra charges for your employer.

Employees of NFP have the option to receive a total of $15,900 per year through a packaging scheme.

Individuals who receive their salary through a packaging system will only be taxed on the remaining amount of their salary, resulting in a notable decrease in their taxable income and ultimately leading to a lower income tax payment.

Is it Possible for a Non-Profit Employee to Receive a Vehicle as Part of Their Salary Package?

By being employed by an NFP organization, individuals have the opportunity to receive tax benefits through salary packaging a vehicle.

Usually, cars are bought either with full payment or through financing. However, opting for a salary package for your car can result in greater savings.

Vehicle packages, also referred to as a novated lease, offer a cost-efficient approach for buying and maintaining a car. Unlike purchasing a car outright, a novated lease combines all necessary car expenses into a single payment that is deducted from your pre-tax income.

There are notable advantages to be gained, such as tax savings, reduced expenses for vehicle maintenance, lower GST, and a lower purchase price.

One benefit of opting for novated leasing is the availability of a fuel card, which aids in managing all expenses related to the car. Additionally, novated leases allow employees to afford business car models that may have been financially unattainable if they were to buy them outright.

Vehicles that are part of a salary packaging arrangement can serve both business and personal purposes.

Is it Possible for a Not-for-Profit Employee to Use a Salary Packaging Scheme for Mortgage or Rent?

Employees working for not-for-profit organizations can also take advantage of tax-free salary sacrificing for their mortgage or rent payments. This benefit can be accessed through the salary sacrificing mortgage program.

Salary packaging can be utilized to boost your disposable income by including both mortgages and rent. Additionally, pre-tax dollars can also cover other consistent expenses, like loan payments and school fees, as part of a packaging agreement.

Additional personal expenses that may be eligible for salary packaging are:

• Usual reported costs such as payments made with a credit card.
• Adaptable daily expenditures like utility bills, groceries, and gas.
• Benefits for those living in remote areas.

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Benefits of Salary Packaging for Non-Profit Organizations

Avoid Paying Fringe Benefits Tax

Several not-for-profit organizations (NFPs) are eligible for exemptions from fringe benefits tax (FBT). Normally, an employer would be required to pay FBT on non-cash benefits, such as laptops, cars, and phones, that are provided on your behalf and used for personal purposes outside of work.

Non-profit organizations have an advantage over private or "for-profit" companies as they are able to provide non-monetary benefits at a reduced expense, making the option of salary sacrificing more appealing to their employees.

The regulations surrounding taxes, such as fringe benefit tax, may vary depending on individual situations, such as one's yearly income. It is not within our capabilities to offer expert guidance on taxable earnings. If one wishes to learn more about fringe benefit tax, it is strongly advised to consult a knowledgeable tax accountant for their taxation advice.

Additional Advantages of Salary Packages

Companies that offer salary packaging perks have a higher likelihood of attracting and retaining employees. This means that for the same amount of money, employees can receive more benefits. Additionally, employers can provide fringe benefits without incurring additional taxes.