Maxxia Salary Packaging Savings Calculator
Estimate your potential tax savings and increase in net income through salary packaging.
What is Maxxia and Salary Packaging?
Maxxia is one of Australia's leading providers of salary packaging services. Salary packaging, also known as salary sacrificing, is an arrangement between an employer and an employee where the employee agrees to forgo part of their future salary or wages in return for their employer providing them with benefits of a similar value.
The key advantage of salary packaging is that these benefits are often paid for with pre-tax dollars, which can reduce your taxable income. This means you pay less income tax and potentially have more disposable income. It's a smart way to stretch your salary further by paying for everyday expenses or big-ticket items with money that hasn't been taxed yet.
How Does Salary Packaging Work?
When you salary package, a portion of your gross salary is allocated towards specific benefits before income tax is calculated. This effectively lowers your taxable income. For example, if your gross salary is $70,000 and you package $10,000 for a novated lease, your taxable income becomes $60,000.
The benefits that can be packaged vary depending on your employer and their industry (e.g., public hospital employees, charities, and some private sector employees have different entitlements). Common packageable items include:
- Novated Leases: For financing a car, including running costs.
- Living Expenses: Such as mortgage repayments, rent, or utility bills (often for specific industries like health or charities, up to a capped amount).
- Meal Entertainment & Holiday Accommodation: For eligible employees, allowing pre-tax payments for dining and accommodation.
- Remote Area Housing: For employees living in remote areas.
- Superannuation: Additional contributions above the compulsory employer contributions.
- Work-Related Expenses: Specific tools, equipment, or professional subscriptions.
Understanding the Maxxia Calculator
Our Maxxia calculator provides an estimate of the tax savings you could achieve by salary packaging. It takes into account your annual gross salary and the amount you wish to package, then compares your tax liability before and after packaging.
Gross Salary
This is your total annual income before any tax or deductions are taken out. It's the starting point for all calculations.
Annual Packageable Amount
This is the total value of the benefits you plan to salary package over a year. For instance, if your novated lease payments and associated running costs, or your capped living expenses, total $9,000 per year, this is the figure you would enter.
The calculator then estimates your original income tax, your income tax after packaging, and the difference between the two, which is your estimated annual tax saving. It also shows your estimated net disposable income in both scenarios, giving you a clearer picture of the financial benefits.
Important Considerations and Disclaimer
While salary packaging offers significant financial benefits, it's crucial to understand a few key points:
- Fringe Benefits Tax (FBT): Some packaged benefits are subject to FBT, which is a tax paid by your employer. However, many benefits offered through Maxxia, especially for specific industries (e.g., healthcare, charities), are FBT-exempt or have concessional FBT treatment. This calculator simplifies FBT treatment for estimation purposes.
- Individual Circumstances: Tax laws and salary packaging rules can be complex and are subject to change. Your personal financial situation, other deductions, and specific employer arrangements will influence your actual savings.
- Professional Advice: This calculator provides an estimate only. It is not financial advice. We strongly recommend consulting with a qualified financial advisor or Maxxia directly to understand your specific eligibility and potential savings.
Conclusion
Salary packaging through providers like Maxxia can be a powerful tool for optimizing your income and improving your financial well-being. By understanding how it works and using tools like this calculator for an initial estimate, you can take the first step towards making your salary work harder for you. Always remember to seek personalized advice to ensure it aligns with your financial goals.