Policy Directive Salary Packaging

Policy Directive

Salary Packaging

Summary This Policy Directive outlines the Salary Packaging Scheme for staff employed in the

NSW Health Service.

Document type Policy Directive

Document number PD2018_044

Publication date 07 December 2018

Author branch Financial Services and Asset Management

Branch contact (02) 9391 9273

Review date 28 February 2024

Policy manual Not applicable

File number H18/41237

Status Review

Functional group Corporate Administration - Finance

Applies to Local Health Districts, Board Governed Statutory Health Corporations, Specialty

Network Governed Statutory Health Corporations, Affiliated Health Organisations,

NSW Health Pathology, Public Health System Support Division, Community Health

Centres, NSW Ambulance Service, Public Hospitals

Distributed to Ministry of Health, Public Health System, NSW Ambulance Service, Health

Associations Unions

Audience All staff that are eligible to salary package

Secretary, NSW Health

This Policy Directive may be varied, withdrawn or replaced at any time. Compliance with this directive is

mandatory for NSW Health and is a condition of subsidy for public health organisations.

POLICY STATEMENT

SALARY PACKAGING

PURPOSE

Pursuant to Section 57A of the Fringe Benefits Tax Assessment Act 1986 (¡°FBT Act¡±)

government employees whose duties are performed exclusively in or in connection

with a public hospital, or employees who are predominantly involved in connection with

the provision of ambulance services are eligible to be provided with fringe benefits

which are exempt from FBT up to a threshold cap (¡°the exemption status¡±).

Salary packaging is a tax effective means, for an employee to utilise the exemption

status, whereby the employee agrees to forego part of their future remuneration in

exchange for non-cash benefits.

Permanent full time and part time employees, temporary employees, and employees

employed under specific grants or funds for periods in excess of 12 months who work in

agencies of the NSW Health Service which meet the exemption status under the FBT

Act may be eligible to enter this scheme. Casual employees would usually be ineligible

to join the scheme given the limitations of casual engagement; however casuals may

salary package at the discretion of the Health agency based on the work patterns

established and the administrative policy of the Health agency.

The scheme also applies to Health Executives employed in the Health Executive

Service who meet the exemption status under s 57A of the FBT Act.

The eligibility of employees of other Health agencies is determined by their role in the

relevant organisation, and whether they meet the exemption status under s 57A of the

FBT Act.

Board members and/or Chairperson are considered to be officeholders for tax purposes

and are not employees. As such, Board members and/or Chairperson are ineligible to

join the scheme.

MANDATORY REQUIREMENTS

Entry into the salary packaging scheme is voluntary. Employees who choose not to

salary package will continue to receive 100% of their salary in cash. Employees who

participate in the salary packaging scheme may exit at any time should their

circumstances change, subject to meeting the required period of notice and any payout

obligations, e.g. under novated lease arrangements for a motor vehicle. Those choosing

to join the scheme can select benefits from the menu at Section 5 of the Procedures

Document.

An employee can devote up to 100% of their salary to either salary sacrifice to

superannuation or to salary packaging (subject to the exemption cap), or to a

combination of both.

PD2018_044

Issue date: December-2018

Page 1 of 3

POLICY STATEMENT

IMPLEMENTATION

Procedures for salary packaging

Please refer to the Salary Packaging Procedures Document for further information

about the implementation of this policy.

¡°Salary¡± for salary packaging purposes

For the purpose of salary packaging, salary is an employee¡¯s substantive base salary as

at the date of commencement of each package year, and excludes higher duties

allowances. The substantive salary is the award salary. Some allowances may be

included in award salary, but this will depend on the award.

¡®Salary¡¯ is defined in the salary packaging clauses of NSW Health Awards as being:

?

the award salary as expressed in the salaries clause of the award,

?

the award salary as though the employee was not salary packaging, and

?

salary as also including ¡®approved employment benefits¡¯ which encompass the

benefits packaged, the packaging administration fee, and the employer¡¯s share of

tax savings.

Where an employee decides to participate in both salary sacrifice for superannuation

and salary packaging, the amount of salary to be used for salary sacrifice for

superannuation is deducted first from the employee¡¯s pre-tax salary.

Salary packaging is then based on the salary after the amount for salary sacrificing for

superannuation has been deducted. The value of the salary packaging benefit(s), the

employer¡¯s 50% share of the savings, and the 50% share of the administration fee, is

deducted from the employee¡¯s remaining salary.

Administration fees

Each Health agency will charge each participating employee an annual fee for

administering their package which will be deducted on a pro rata basis for each period.

The cost of the administration fee, including GST, will be shared equally by the agency

and the employee.

In all instances, the Health agency will require the employee to salary package for the

administration fee liability. In other words, the employer recovers 50% of the

administration fee from the employee.

An employee may review and alter their salary packaging arrangements at the end of

each package year (usually 31 March) at no extra cost. If an employee elects to change

their packaging arrangements during the packaging year, they may incur an alteration

fee.

PD2018_044

Issue date: December-2018

Page 2 of 3

POLICY STATEMENT

External Salary Packging Administration Provider

Health agencies that elect to outsource the administration of the salary packaging

scheme are to elect an external salary packaging provider from the NSW Health Salary

Packaging Administration Service Panel.

Health Agencies that engage an external salary packaging administration provider must

ensure that a Salary Packaging Relationship/ Liaison Manager is appointed with the

appropriate skill and experience to manage the external salary packaging administration

provider and ensure compliance with this policy and other legislation obligations

including tax.

REVISION HISTORY

Version

December 2018

(PD2018_044)

Approved by

Deputy

Secretary &

CFO, Finance

and Asset

Management

Amendment notes

First Policy Directive.

ATTACHMENTS

1. Salary Packaging: Procedures.

PD2018_044

Issue date: December-2018

Page 3 of 3

Salary Packaging

PROCEDURES

Issue date: December-2018

PD2018_044

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