Is this illegal? Mortgage salary sacrifice

Then how do you actually pay the mortgage?

 

I assume they will take the repayment from out of the offset. I'll ask the broker one day once we receive notification that the new loan setup is complete. Broker has probably told me, but we applied back in December and I don't remember much of those conversations.

 

No. Tax exempt employers and certain organisations.

1. Hospital / health workers get the best deal FBT exemption
2. Teaching, clubs and some other untaxed employers get a lesser deal (as the employer is not a taxable entity)
3. And there there are all other employers where only "exempt fringe benefits" are of benefit. These are quite limited.

 

A employee receiving fringe benefits will have SOME fringe benefits reported on a annual PAYG sumamry that is based on specific formulas that adjust the value of the benefit received.
When lodging a return all taxpayers have a calculation made based on data in the return. Its called adjusted taxable income. This is a measure used for a range of govt benefits and services to standardise "income" so it doesnt advantage those who get fringe benefits and salary sacrifice to super and so on. Centreklink use it too. ATI is based on :

Adjusted taxable income (ATI) for you and your dependants 2020

 

Where do charities fit in? I have often seen job adverts offering large FBT free salary sacrifice

 

FBT exemption scroll to base of page

lists the categories ...incl registered charities, unis, some aged care etc

 

Saw this advert today linky, "...NFP salary packaging ($15,900 tax free) plus meals and entertainment benefits"

 

That doesnt mean they are paid more. Compare a private hospital manager with public service. IMO if they abolished fbt concessions nurses and Docs would be disadvantaged $8k pa and that is why nobody dares

 

Up to 30k ish p/a interest/rent for remote area housing non reportable fbt. You do have to work for a non for profit PBI. Good if banks understood it, no tax on income used for rent/mortgage payments should increase borrowing capacity a lot.

 

Have heard of a few ppl using that hack, also can change employers and get another full FBT allowance, no prorata work for 3 mths, full allowance. Usually Doctors/Nurses that can do this type of thing, travel around work 3 mths here, 6 mths there.

 

Loads of nurses work 2 part time jobs specifically to access the double dip. eg two hospital regions or a private + public hospital. COVID has been nasty to the practice as some staff were required to confine work to one hospital to limit covid transmission. Casual staff cant access it at all. So some lost 1 job and $9K of benefits and had to take on extra casual work which gets no fringe benefit.

Also remember that this benefit is a factor in how pay scales and approved increases are calculated. Nurses, ambo's etc work long hard hours and certainly are underpaid for their contribution. And the hospital system milks it for all they can. A few years back Rudd tried to take it away and didnt win any favours. If they took it away there was a potential union claim for a 20% increase in pay rates.

https://www.healthshare.nsw.gov.au/__data/assets/pdf_file/0011/479990/Employee-Benefits.pdf

 

Just wanted to report back in on this, as there appears to be some conflicting views.

My thoughts initially were the same as @Paul@PFI 's where how could this possibly be legal.

So I made a call to the salary packaging mob, pretending to be a paramedic. I was informed that the maximum amount that can be salary sacrificed under this arrangement was $9020 (odd amount), which coincided with what @Toon had previously stated.

It was also reconfirmed to me, that it was fine to be paid into an offset account, and all that I would need to do is provide evidence that the amount of interest paid was equal to/greater than the $9020 amount.

For the life of me though I don't see how that can be anything other than a potential tax dodge. For instance, you receive the salary sacrifice amount into your offset and then go on a holiday - where there was never any intention of paying it into the PPOR as first thought.

 

But it is paid off the mortgage. The amount salary packaged is equal to/lesser than the loan repayments made over the year. It is basically a reimbursement of those loan repayments. Whether you also spend money on a holiday from the same account is irrelevant.

Similarly, we used to package utility bills. After accumulating them for a while we would submit them to salary packaging for reimbursement into whatever account was selected. The reimbursed money may then be used for anything, but it was reimbursed for money already spent on the claimable items.

 

Yes that is a important difference. A expenses reimbursement can be a exempt fringe benefit but it cant rfelect as MONEY eg a amount credited to a offset. A offset or savings is like receiving ages and should be taxable income and nota exempt fringe beenfit. The ATO ruling says as much. If a loan is credited then its OK, not a offset account.

I saw someone who had this issue a year ofr two back and on checking the packaging company Maxxis reported back to say they credited the loan and were given that offset account # by the taxpayer. Not their mistake. Maxxis in that situation also suggested that there was a issue of concern and allowed the employee to repay them from the offset then they paid it back to the correct loan account and it sorted it.

 

just be careful here, be clear to quote in the correct context.

If a benefit is exempt, it is not included on payment summaries (group certificates) - logical of course as it is exempt and no FBT applies.

If something is not exempt - and over the $2,000 limit, the grossed up benefit is then reported on payment summaries as mentioned and used in various government calculations & benefits.

 

Does employer still pay 10% SG on the salary sacrificed amount?

 

Yes.