Salary Sacrifice - Australian Customs Service

UNCLASSIFIED
INSTRUCTION AND GUIDELINE
Salary Sacrifice
C_LDR07/13
January 2013
This Instruction and Guideline refers to Practice Statement:
C_LDR07 - Conditions of Employment in the Australian Customs and Border
Protection Service
Published Date: 18 February 2013
Availability: Internal and External
Purpose: To provide details of the Australian Customs and Border
Protection Service (Customs and Border Protection)Salary
Sacrifice policy and arrangements
Owner: National Director People and Corporate Services
Category: Corporate
Sub-Category: Leadership and Workforce
Contact: Director Employee Conditions and Industrial Relations (02 6275
6235)
The electronic version published on the Practice Statement Framework
SharePoint site, accessible through the Intranet, is the current Instruction and
Guideline

Table of Contents
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Table of Contents ................................................................................................................ 2
Introduction ......................................................................................................................... 3
1. Definition ................................................................................................................... 4
2. Salary sacrifice as offered by Customs and Border Protection ............................ 4
3. Salary sacrifice items ............................................................................................... 4
4. What is salary for salary sacrificing purposes? ..................................................... 4
5. How much salary can be sacrificed? ...................................................................... 5
6. Insufficient Funds..................................................................................................... 5
7. Salary sacrifice providers ........................................................................................ 5
7.1 Motor Vehicle packaging and Airline Lounge membership ...................................... 5
7.2 Superannuation ...................................................................................................... 5
8. Superannuation policy and process ....................................................................... 6
9. Salary Sacrifice and Fringe Benefits Tax (FBT) ..................................................... 6
10. ‘Exempt car benefits’ ............................................................................................... 7
11. Separations ............................................................................................................... 7
12. Financial advice ........................................................................................................ 7
13. Additional Information ............................................................................................. 7
14. Related Policies and References ............................................................................. 8
15. Key Roles and Responsibilities ............................................................................... 8
16. Consultation ............................................................................................................. 8
16.1 Internal Consultation ............................................................................................... 8
16.2 External Consultation .............................................................................................. 8
Endorsement ....................................................................................................................... 9
Approval .............................................................................................................................. 9
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Summary of main points
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The key principle of salary sacrifice arrangements is that it entails no additional
cost to Customs and Border Protection
Employees are encouraged to seek financial advice prior to commencing salary
sacrifice arrangements
Customs and Border Protection accepts no responsibility for any financial
advantage or disadvantage experienced by an employee who chooses salary
sacrifice arrangements
This I&G applies to:
All Customs and Border Protection employees for salary sacrifice of superannuation.
All Customs and Border Protection employees except non-ongoing irregular and
intermittent employees for salary sacrifice of motor vehicles and airline lounge
membership 1 .
Introduction
In accordance with Clause 14.2 of the Australian Customs and Border Protection Service
Enterprise Agreement 2011-2014 (EA), salary sacrifice arrangements under which Customs
and Border Protection may pay an amount in respect of an employee, are a feature of
employee remuneration that are at the discretion of the employee.
1 To salary sacrifice a vehicle or airline lounge membership, employees must be in receipt of regular fortnightly
salary payments that will cover the cost of deductions.
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1. Definition
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1.1 Salary sacrifice provides a means for employees to have part of their remuneration
package paid as a non-cash benefit. This feature of employee remuneration is at the
discretion of the employee.
2. Salary sacrifice as offered by Customs and Border
Protection
2.1 Salary sacrifice is provided for in the Customs and Border Protection Service EA.
2.2 Employees not covered by the EA (for example SES officers) have salary sacrifice
provided for in their Australian Workplace Agreements (AWA) and/or Section 24
Determinations.
3. Salary sacrifice items
3.1 Currently Customs and Border Protection allows employees to salary sacrifice the
following:
• Motor vehicles
• Airline Lounge Membership
• Superannuation
3.2 Salary sacrifice of motor vehicles and airline lounge membership is available to all
employees, except 2 non-ongoing irregular and intermittent employees, subject to it
being at no additional cost to Customs and Border Protection.
3.3 Salary sacrifice of superannuation is available to all employees, subject to it being at
no additional cost to Customs and Border Protection.
3.4 If there is any additional tax payable by Customs and Border Protection, including
Fringe Benefits Tax (FBT) or any equivalent tax due to salary sacrifice arrangements,
the additional tax will be recovered from the employee.
4. What is salary for salary sacrificing purposes?
4.1 For employees covered by the EA, salary for salary sacrifice purposes is the salary
level applicable to the employee within the relevant classification grouping specified
in the EA and any allowances, shift penalties and overtime that may be payable.
Performance bonuses cannot be sacrificed.
4.2 For employees not covered by the EA, it is the salary specified in their AWA or
Section 24 Determination including any allowances that may be payable.
Performance bonuses may be sacrificed but the employee must elect to do so before
the commencement of the Performance Assessment period.
2 To salary sacrifice a vehicle or airline lounge membership, employees must be in receipt of regular fortnightly
salary payments that will cover the cost of deductions.
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5. How much salary can be sacrificed?
5.1 There is no limit to the amount of salary that may be sacrificed; however, it is the
employee’s responsibility to ensure that there are sufficient funds in the fortnightly
pay to meet the salary sacrifice request.
5.2 Salary sacrifice deductions are made after, requisite taxation, superannuation, court
order or child support payments and recovery of any overpayments from your gross
income.
6. Insufficient Funds
6.1 If there are insufficient funds in the fortnightly pay to meet the full value of the salary
sacrifice request, partial salary sacrifice will be made and any arrears balance
automatically deducted from the next available fortnightly pay.
6.2 Customs and Border Protection bears no responsibility for any financial disadvantage
experienced by an employee when there are insufficient funds available in an
employee's pay to meet an employee's salary sacrifice request.
6.3 Employees should be aware that by entering into a salary sacrifice arrangement,
they are acknowledging that they will not:
a) access any Government provided benefit, or
b) adjust payments for child support,
where the entitlement to access such benefits or the limitation of financial liabilities is
as a direct result of the reduction in gross cash salary achieved through salary
sacrifice. If Customs and Border Protection becomes aware of such circumstances,
the offer of salary sacrifice to the employee may be discontinued.
7. Salary sacrifice providers
7.1 Motor Vehicle packaging and Airline Lounge membership
7.1.1 Customs and Border Protection has a panel of providers in place for the provision
of vehicle and airline lounge memberships salary packaging arrangements via
payroll deductions. Employees must use one of the contracted providers to
facilitate payroll deductions.
7.1.2 These providers are listed on the intranet and can be accessed by clicking the
following hyperlink: Salary sacrifice
7.1.3 It is up to staff to choose and liaise with the provider they want to provide them
with the salary sacrifice item.
7.2 Superannuation
7.2.1 Superannuation salary sacrifice services are provided by NPAC.
7.2.2 Employees are required to submit a form (Forms) to NPAC via Corporate
Connect requesting the superannuation salary sacrifice arrangement.
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Employees should allow 2- 3 weeks for the set up of new applications as
COMPASS and QSP coding is required to facilitate any new salary sacrifice
arrangement.
8. Superannuation policy and process
8.1 The following sets out the parameters within which employees may participate in a
salary sacrifice arrangement for superannuation:
the superannuation fund must be approved under the Australian Prudential
Regulatory Authority (APRA);
Customs and Border Protection must be able to make payments to the fund by
an appropriate financial facility (as determined by Customs and Border
Protection), and
the contribution rate may only be changed annually on the anniversary of the
commencement of the deduction. If an employee wishes to change the
contribution rate prior to this date, the application must be approved by the
Director, NPAC.
8.2 Additionally, non-ongoing irregular and intermittent employees can elect to salary
sacrifice to a superannuation fund provided:
• The superannuation fund of choice is an accumulation fund and not a defined
benefit fund; and
• The nominated amount is defined by percentage and is not a dollar amount.
8.3 Superannuation salary sacrifice deductions will contribute towards the
Superannuation Concessional Contributions Cap.
9. Salary Sacrifice and Fringe Benefits Tax (FBT)
9.1 FBT is a tax on the employer not the employee. Any FBT payable in relation to salary
sacrifice arrangement (this includes executive vehicles) is recovered from the
employee. The FBT paid by Customs and Border Protection in relation to other
benefits provided is not recovered from employees.
9.2 When an employee makes an after tax contribution to the cost of the benefit provided
by the employer, this contribution reduces the taxable value of the benefit.
9.3 For example, when an employee who has a car as part of their salary package
makes an after tax contribution to the running costs of the car, the amount
contributed is treated as an employee contribution and reduces the taxable value of
the benefit. Customs and Border Protection employees may be required to make
after tax contributions for cars.
9.4 If an employee enters a salary sacrifice arrangement to obtain a fringe benefit as part
of their overall remuneration package, the amount sacrificed from their pre tax
earnings is not treated as an employee contribution. Employee contributions can only
be made from the after tax income of an employee.
9.5 Where the after tax contributions made by the employee are not sufficient to reduce
the FBT payable to $nil, any FBT paid by Customs and Border Protection will be
recovered from the employee.
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10. ‘Exempt car benefits’
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10.1.1 An ‘exempt car benefit’ refers to vehicles e.g. a utility or a panel van:
• designed to carry less than one tonne; and
• that is used only for work-related and other minor, infrequent and irregular
private travel.
10.1.2 These vehicles are potentially exempt from FBT where the only private travel
undertaken in the vehicle is travel between home and work.
10.1.3 In addition, certain vehicles are potentially exempt from FBT on the basis that the
vehicle does not constitute a ‘car’ under the definition contained in the FBT
legislation and where the only private travel is between home and work.
10.1.4 Customs and Border Protection’s salary sacrifice policy does not enable
employees to package vehicles purporting to fall within these exemptions. The
following vehicles are not considered to fall within these exemptions or do not
meet the definition of a car and as such cannot be salary packaged:
• Dual cab utilities;
• Panel vans;
• Motor cycles and similar vehicles;
• Vehicles that carry a load of one tonne or more.
11. Separations
11.1.1 Where a separating employee has salary sacrifice arrangements in place, NPAC
requires a final reconciliation value from the salary sacrifice service provider for
inclusion in the final monies calculation prior to issuing the final monies payment.
12. Financial advice
12.1.1 Customs and Border Protection recommends that employees seek financial
advice before commencing salary sacrifice, as Customs and Border Protection
bears no responsibility for any financial advantage or disadvantage experienced
by an employee who chooses to salary sacrifice.
13. Additional Information
13.1.1 Additional information is available at http://intranet/about-me/pay-andallowances/salary-sacrifice/default.asp
13.1.2 Additional information on FBT implications is available in the Fringe Benefits Tax
Information for Employees and on the Australian Taxation Office website at
Salary sacrifice arrangements for employees
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13.1.3 If you require further information on FBT implications on Salary Sacrifice, please
contact the Treasury and Taxation Team, Strategy, Finance and Integrity
Division.
14. Related Policies and References
14.1 Practice Statements:
C_LDR07 – Conditions of Employment in the Australian Customs and Border
Protection Service
15. Key Roles and Responsibilities
15.1.1 The policy owner for this Instruction and Guideline is National Director, People
and Corporate Services.
15.1.2 The advisors to this policy are the Director Employee and Industrial Relations and
the Director NPAC
16. Consultation
16.1 Internal Consultation
16.1.1 The following internal stakeholders have been consulted in the development of
this Instruction and Guideline.
• Director Employee Conditions and Industrial Relations
• Director National Pay and Accounts Centre and team
• Manager, Taxation
16.2 External Consultation
16.2.1 The following external stakeholders have been consulted in the development of
this Instruction and Guideline:
• CPSU
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Endorsement
Endorsed on 31 January 2013
By
Approval
UNCLASSIFIED
Rosemary Holloway
NM Workplace Relations and
Safety
People and Corporate
Services
Approved on 1 February 2013
By
James Watson
A/g National Director
People and Corporate
Services
Period of Effect Jan 2013 - 2016 Review Date Jan 2014
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