What you need to know about Recent Changes to the In-House Benefit


Hi Readers – Simon Ellis here, posting about the latest legislative changes…

In the mid-year budget delivered on October 22 the Gillard Government announced without warning that the option to salary package ‘in-house benefits’ would be closed down immediately for new employees, and phased out for employees already packaging the benefit.

In-house benefits are goods or services that your employer (or an associate of your employer) sells to the general public.  For example if you worked for Apple then an iPad would be an in-house benefit, or alternatively if you worked for a financial planner then financial planning advice would be an in-house benefit.

Under the old rules, employees could generally package up to $1,333 worth of these benefits each year – or put another way employees could buy up to $1,333 worth of their employer’s products each year and pay for them using pre-tax income.  It wasn’t a widely used benefit, particularly since not all employers sell goods or services that their employees actually want to buy, but for some employees it was an extra $300 – $600 in tax savings per year.

It’s fair to say that Smartsalary isn’t thrilled with the removal of this benefit, but we’re even less thrilled that the government has not seen fit to release any detail about how to identify whether an employee has a “pre-existing” arrangement (i.e. a packaging agreement that can continue through to April 2014 under the transitional rules).

Nonetheless we’ve been working hard (with what little information we have) to develop a framework that will enable employees currently packaging this benefit to continue packaging it for as long as possible.  At this point, based on what we’ve heard from Treasury, it is our view that anyone who signed up for salary packaging with their current employer prior to 22 October should be able to continue to package in-house benefits through to 1 April 2014 – but we’re yet to get formal confirmation of that view from either Treasury or in the form of actual draft legislation.

As always we’ll keep you informed of our progress, but for the time being it looks like the benefit is on its way out.

Leave a comment here.

1 Response to “What you need to know about Recent Changes to the In-House Benefit”

  1. 1 Sean December 4, 2012 at 12:12 pm

    It is interesting to see quite a few changes occuring with Fringe Benefits. Any chance of your insight into the potential changes facing Health/PBI employers?

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Deven Billimoria
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