Sometimes known as a salary sacrifice, salary packaging is a deal between the employer and the employee where part of their monthly salary is replaced by benefits such as a laptop, a mobile phone, or a company car. Vehicles can also be bought through a novated lease, where the company will rent the car on the employee’s behalf. In some cases, the employee can also choose to have their salary deducted while utilizing ‘green’ methods of receiving benefits. The last method of salary packaging is becoming particularly popular with younger employees, who are concerned about the effects of global warming and are keen to have a package which includes a focus on climate change.

There are so many things which can be bought through the salary packaging system that it seems almost too good to be true. It is a particularly effective way for young people who do not have large bills to make quick purchases without risking a negative effect on their credit scores. Employees can choose to buy cars with or without a novated lease, get a tabled computer such as an iPad, purchase benefits from the company they work for, buy insurance, professional subscriptions to a society, get education related to their employment, or buy other electronic equipment, choose investment loans, or pay financial advice fees.

In fact, in some circumstances, there are even more possibilities for the employee to get benefits through the use of salary packaging. If the company is eligible for a rebate or an exemption, then the employer may also offer private health insurance, mortgage payments or rent, loan payments, private school fees, or even the general costs of living. All of these will be taken out of the salary.

The novated lease system is perhaps the most complicated, with the car being rented by the employer in their employee’s name, and all of the responsibility for the car and the lease being the employer’s responsibility for as long as the Novation lasts. The employee can also have all of the running costs paid through the packaging deal. If the employer opts for the green deal, they can get savings on the car, whether new or second-hand, and they can also get discounts on the lease. The green company will also help both parties to work out exactly what will be owed, for example by calculating the amount of fuel needed, or the distance to be travelled. There are also many other benefits to purchasing the car through the Novated system.

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