Salary packaging (or salary sacrifice) is an agreement between employers and employees, where the employee agrees to receive a lower amount of pay in exchange for benefits of a similar value to the reduced pay.
As an employer, you may consider offering your employees a salary packaging option to provide them with the option to pay for certain expenses with their pre-tax salary. Typically, you are an employer of a not-for-profit organisation or trade union, although we are seeing other industries jump onboard to offer salary packaging.
As an employee, if you’re employed by a not-for-profit organisation, your contract may state that you are eligible to package up to $15,900. What this means is that up to $15,900 of what you spend of your salary is tax-free. Depending on your employer, this may include things like groceries, bills, vehicles, holidays, rent and mortgage repayments. The main benefit is that employees pay less income tax and end up with more disposable income.
So how do prepaid cards come into the picture? You can offer your employees the option to receive their employee benefits on a dedicated prepaid card.
- Saves them time from providing receipts or filling out claim forms
- Easy to track all their expenses in the one account
- Controls/limits spending – employees can request a set pre-tax salary to manage every day or business-related purchases
- Help you attract and retain your most valuable asset – your people!
- Reduce administration and streamline process. For example, if you have dedicated Meals & Entertainment Cards, then it will be easier to process claims and reconcile expenses under this account.
Types of Salary Packaging Card
Similar to a debit card, employees can pay for everyday expenses such as groceries, petrol, clothing, bills and holidays.
Meal & Accommodation Card
A dedicated Meal & Accommodation Card allow employees to spend meals and accommodation tax-free. This type of card is especially suitable for employees who work outside of standard hours or travel as part of their job. Expenses include items such as hotel stays, transport, dining at a restaurant or cafe, just to name a few.
Interested in a prepaid salary packaging solution?
Our Visa Prepaid Cards are perfect for employees wanting to access to their benefits for everyday, meals, accommodation and travel expenses.