Prinisha said salary sacrifice has been a game-changer for her finances. (Source: Supplied) <\/p>\n
An Australian worker<\/a> has praised salary sacrificing<\/a> for helping her family save thousands of dollars a year<\/a>. Also known as salary packaging<\/a>, it’s a way for certain workers to funnel some of their pre-tax pay towards their superannuation<\/a>, grocery shop<\/a>, or dining out with friends or loved ones.<\/p>\n Prinisha Shyam jumped on the trend 13 years ago and said it’s been a game-changer for her finances. The Melbourne physiotherapist told Yahoo Finance how she uses it has changed over the years.<\/p>\n “Back then, I was obviously younger, so I was going out and meeting with friends and having meals<\/a> and things like that,” she said.<\/p>\n “So I used it largely for that social aspect and covering those sorts of costs.<\/p>\n “Now, I have a young family, and I use it a bit more from a budgeting perspective for our day-to-day expenses, like groceries and petrol.”<\/p>\n At the moment, she’s allowed to use just under $200 per fortnight for groceries, which covers roughly 50 per cent of her shop.<\/p>\n She estimated that around $5,000 of her pre-tax pay is used each year for salary packaging, and she said the tool acts almost like “free money”, even though she’s just moving her wage around more strategically.<\/p>\n “I look at it as if it’s like a bonus,” Shyam added.<\/p>\n Do you have a story? Email stew.perrie@yahooinc.com<\/p>\n You can approach your employer to see if the business you work for has a salary packaging system set up already.<\/p>\n You can allocate a portion of your salary towards specific benefits, which vary in size and categories, depending on what industry you’re in.<\/p>\n The value of these benefits is then deducted from your gross salary before tax is calculated, which then reduces your taxable income and can make you pay less tax.<\/p>\n “Every little bit does make a difference,” Shyam told Yahoo Finance.<\/p>\n “It’s been great for me. And I think if I go elsewhere for work, I’d be pushing to get some sort of salary packaging arrangement.”<\/p>\n Salary packaging can be accessed under three tiers:<\/p>\n People in aged care, disability support, community services, medical research organisations, and charities or non-profits have a limit for general expenses of $15,900 per year grossed down<\/p>\n People in public hospitals, ambulance services and other medical areas have a limit of $9,010 per year grossed down<\/p>\n People in the corporate sector<\/p>\n Story Continues <\/p>\n Those in the first two tiers can dedicate that money towards rent, their mortgage payments, groceries, dining or drinking out, and other expenses.<\/p>\n Each category can have its own limit within that $9,100-$15,900 threshold.<\/p>\n For corporate workers, they can put their money towards:<\/p>\n Adding to their superannuation (the total per year is $30,000, which includes your employer’s contributions and your own)<\/p>\n Portable electronic devices (if you use them for work)<\/p>\n Novated leases<\/a> (which can be used to pay for a car and cover running costs)<\/p>\n Those in the first two tiers can also put part of their salary sacrifice towards those three areas as well.<\/p>\n If you salary sacrificed $200 of your pay each month to your super, you could have $366,149 in your account after 30 years, based on a 9 per cent rate of return.<\/p>\n Jan Venter, customer education specialist at salary sacrifice company Smart, told Yahoo Finance said it’s worth exploring if it’s right for you.<\/p>\n “We definitely encourage people to do their research and get as much information as they can to see if it’s going to make sense for them, because it could be thousands of people needing thousands of dollars, and could just be more money in their pockets,” he said.<\/p>\n “Depending on your tax rate, you can be a saving from anything around the 20 per cent to 30 per cent mark, where most Australians sit, and even higher at 37 per cent to 45 per cent, if you’re on those higher tax brackets.<\/p>\n “So, it’s not just for people who are on high incomes, it’s anyone who’s paying tax.”<\/p>\n Get the latest Yahoo Finance news – follow us on Facebook<\/a>, LinkedIn<\/a> and Instagram<\/a>.<\/p>\n You can reduce your taxable income by salary packaging and it’s helped many to divert their cash to other expenses. (Source: Getty) \u00b7 Francisco Martins via Getty Images <\/p>\n