Salary Packaging Services Contract

  • Mandatory
Updated: 26 Nov 2019
Date:
1 Apr 2018 - 31 Mar 2021
Contract Number:
6036
Type:
Whole of government
Managed:
Department of Education
The contract offers approved suppliers for the provision of salary packaging administration services for executives and non-executive employees from all NSW Government public sector agencies and other authorised users.

Range of services

Salary packaging services

A salary package service consists of:

  • selected non-cash benefits
  • any relevant fringe benefits tax
  • the administration fee.

As advised in Premier’s Department Circular 2006-08, the restriction limiting salary packaging to 50% of an employees' superable or award salary has been removed. The amount of salary which can be packaged is now unrestricted.

However, employees will need to pay post-tax commitments and payroll deductions such as employee superannuation contributions, union fees, health fund premiums, maintenance orders etc before determining the availability of salary for packaging purposes.

Benefit items

Subject to any limitations prescribed by Taxation Law, NSW Government and customer agencies, the benefit items that are approved and which may be packaged by participants under the scheme are:

  • employee optional superannuation to First State Super and other complying superannuation funds
  • financial/taxation advise benefits (note: financial advice specifically regarding salary packaging is not part of this benefit)
  • motor vehicles - employees may have more than one car lease and suppliers will not charge any additional fee for additional leases. There will be no additional fee for luxury vehicles and there will be no restriction on car value
  • housing (remote areas only)
  • priority of access fee for child care, and child care (in-house only)
  • professional membership fees and subscriptions
  • taxi expenses
  • mobile phones (if used mainly for business purposes)
  • education expenses (self and professional)
  • portable computer, e.g. laptop or tablet computer such as an iPad (a portable computer can be salary packaged only if it is used by the employee primarily for work purposes and only one portable computer can be packaged per FBT year)
  • E-organiser/diary/PDA/calculator and briefcase
  • airline lounge membership
  • home office expenses
  • income protection insurance
  • newspapers and periodicals

Further details about these items are provided below.

Non-cash benefits

NSW public services employers should offer the benefits listed to employees.

Other employers may determine the range of benefits which may be salary packaged by employees.

Optional Benefit ItemsImpact of FBT

Additional Contributions to First State Super

Not a fringe benefit

Additional Contributions to other complying Funds

Not a fringe benefit

Motor vehicles

Concessionally taxed

Taxi expenses

Exempt

Child Care (on employer’s premises only)

Exempt

Housing – remote areas only

Exempt

Laptops, e-organisers and briefcases

Exempt

Priority of access fee for child care

Exempt

Mobile telephones (primarily used for business purposes)

Exempt

Professional Subscriptions

Otherwise Deductible

Education Expenses (self and professional)

Otherwise Deductible

Note: 'Otherwise deductible' means that the FBT liability is reduced to the extent that an income tax deduction would have applied if the expense was met out of after-tax salary.

Additional superannuation contributions

Employees may salary sacrifice additional contributions to superannuation. These pre-tax contributions can be made to the First State Superannuation Scheme or to any complying superannuation fund. Salary sacrifice contributions may only be made to one fund, not to multiple funds.

Note that information regarding NSW public sector superannuation schemes is available at www.statesuper.nsw.gov.au or www.firststatesuper.com.au. If you have a general superannuation enquiry please telephone the schemes’ customer service numbers;

State Superannuation Scheme (SSS)
Tel:  1300 130 096

State Authorities Superannuation Scheme (SASS)
Tel:  1300 130 095

Police Superannuation Scheme (PSS)
Tel:  1300 130 097

First State Superannuation Scheme (FSS)
Tel:  1300 650 873

Novated motor vehicle lease

A novated motor vehicle lease is a 3-way arrangement between a finance company, an employee and an employer. The vehicle is registered and insured in the employee’s name.

The employee leases a vehicle of their choice under a finance lease from one of the financiers nominated by their Salary Packaging Provider under this contract. Public sector service employees can now novate V8 powered vehicles as a benefit item in their salary packaging from 13 August 2019 onwards.

A Deed of Novation is then entered into between the employee, the employer and the financier under which the employee’s obligation to pay the lease rentals under the finance lease is rescinded for the term of the lease, provided that the employee’s salary packaging arrangement remains current. NSW public sector employees may only enter into a novation arrangement using the NSW Crown Solicitors Deed of Novation.

Under the novation, the employer assumes the obligation to pay the lease rentals and the employee has the obligation to pay the residual or remaining value on completion of the lease. The amount of the lease payments will be deducted from the employee’s pre-tax salary.

The novation agreement will usually run for the term of the finance lease.

Other benefits

Remote area housing benefit

An employee may salary package rental payments in respect of accommodation provided by their employer in a remote area. The definition of remote is prescribed in the tax legislation. The remote area must be the employee’s usual place of employment. A number of conditions have to be met, including:

  • the nature of the business means that employees are likely to move frequently from one residential location to another
  • there is insufficient suitable residential accommodation available in the area in which the employee is employed.

FBT and GST do not apply to the provision of this benefit. It is not a reportable fringe benefit and is not included on an employee’s payment summary.

In-house child care

An employee may salary package the cost of child care fees paid in respect of care provided for their children in a child care centre located on their employer’s business premises.

Employees should note that if they salary package all of their child care fees, they are not eligible to receive the Child Care Benefit (CCB) or the 30% childcare rebate for out of pocket expenses.

FBT and GST do not apply to the provision of this benefit. It is not a reportable fringe benefit and is not included on an employee’s payment summary.

Priority of access fee for child care

Employees may salary package payments made to obtain priority access to certain child care facilities for their children.

The payments must be made under eligible programs administered by the employer to a child care service that is one of the following:

  • an eligible child care centre for the purposes of any provision of the Child Care Act 1972
  • family day care
  • care outside school hours, or
  • care in school vacations.

FBT does not apply to the provision of this benefit.

Professional memberships and subscriptions

An employee may package the cost of annual subscriptions or fees paid to a professional association or trade union and / or annual subscriptions for business journals, magazines and similar publications. There must be a direct connection between an employee’s employment and the membership of the organisation or trade union.

Where the professional memberships and subscriptions are work-related they are not reported on the employee’s payment summary. FBT does not apply.

Taxi expenses

Employees can salary package taxi expenses if certain conditions are met. These include where:

  • the expense arises from a single trip by a taxi beginning or ending at the employee’s workplace, or
  • the taxi trip arises because of an employee’s sickness or injury and is between the employee’s workplace, residence or any other place that it is necessary or appropriate for the employee to go as a result of the sickness or injury.

Mobile telephones

An employee may salary package the cost of a mobile telephone and the associated call costs if the mobile is used primarily for business purposes.

FBT does not apply to this benefit but GST applies to mobile telephones and account. The benefit is not reported on the employee’s payment summary as a fringe benefit.

Self-education expenses

Employees can salary package self-education expenses that are directly related to their current employment.

This includes:

  • the cost of a prescribed course of education including textbooks and equipment relevant to the course of study; and
  • Registration fees incurred in relation to work-related conferences and / or seminars.

Payments to the Higher Education Contribution Scheme (HECS) cannot be included.

Where an employee’ self-education expenses are work related they are exempt from FBT and they are not reported on the employee’s payment summary as a fringe benefit. GST is not generally payable on education costs.

Laptop computers, e-organisers and brief cases

An employee may salary package the GST inclusive cost of one laptop or notebook computer each FBT year (1 April to 31 March) without being liable for FBT.

The ATO considers that the primary features of a laptop computer are that it is relatively small in size, that it is portable and can be operated without an external power source. The computer can include built-in internal and external equipment required for its basic operation, but the cost of repairs, maintenance and software costs cannot be salary packaged.

The computer can be purchased outright or acquired through a lease agreement or other financial arrangement. Where the computer is leased, only the original cost can be salary packaged.

Note that the packaging of an e-organiser / PDA is not limited to one per FBT year.

Key contract features

The purpose of this contract is to offer executives and non-executive employees from all NSW Government public sector agencies and other authorised users an opportunity to use approved suppliers for the provision of salary packaging administration services.

All NSW Government agencies, other than State Owned Corporations, must use this contract if they outsource any of their salary packaging administration. The requirement to use NSW whole-of-government contracts, where they are available, was advised in Premier’s Memorandum
2006-11.

From an employee’s perspective the service providers are required to satisfy the following performance requirements:

  • arrange regular and on-time payment of an employee’s selected benefit items
  • provide a full reconciliation of an employees salary package at prescribed intervals;
  • provide timely advice to employees in relation to their salary packaging enquiries;
  • maintain information to enable benefit payment substantiation for the Australian Taxation Office Compliance and Audit requirements;
  • provide regular status reports to employees as prescribed by this Contract, and
  • resolve all written complaints received from an employee within 5 working days. See section 5 for details.

What is salary packaging?

Salary packaging enables employees to choose whether to take their remuneration as cash salary or select a mix of cash salary and non-cash benefits to suit their individual needs. Employees may determine the mix of salary and benefit items that constitute their salary package subject to the range of benefits offered by their employer.

When employees elect to package their remuneration, their cash salary continues to be subject to PAYG income tax. Under the Fringe Benefits Tax (FBT) legislation, their employer is liable for FBT which may apply on the non-cash benefits. Eligible employees who participate in salary packaging are required to meet the FBT cost associated with the benefits selected.

Participation in salary packaging is voluntary and employees may continue to take all of their remuneration as cash salary.

Financial planning

It is strongly recommended that all employees electing to participate in salary packaging, or vary an existing arrangement, seek professional, independent financial advice, which takes into account their particular circumstances.

A list of qualified and licensed financial planners is available from the Financial Planning Association website.

Flexible salary packaging requires employees to have an active and ongoing involvement in the monitoring of their individual packaging arrangements.

Key benefits

Generally the most attractive benefits for salary packaging are those that do not attract FBT such as superannuation, those that are exempt from FBT such as laptops, and those that are concessionally taxed for FBT such as motor vehicle leases.

Insurance

Broadform public and products

$10 million for any single occurrence and unlimited in the aggregate as to the number of occurrences. The total aggregate liability during any one period of insurance for all claims arising out of the supplier’s services shall not exceed $10 million.

Professional indemnity

Minimum $5 million.

Workers compensation

As required by the laws of each relevant state and territory.

Eligibility to use contract

Subject to agency convenience, and subject to any limitations that may be prescribed by the NSW Government or the customer agency, the following employees are eligible to participate in Salary Packaging Services:

  1. permanent employees including permanent part-time employees
  2. temporary employees
  3. casual employees (casual employees are only eligible to salary package superannuation).

Complaints and disputes

If case of a dispute, both the buyer and the supplier must use their best efforts to resolve it.

The buyer should speak to the supplier's customer service representative first. If they can't solve the matter together, the buyer should then contact NSW Procurement.

If the dispute cannot be resolved by mutual agreement of both parties in consultation with NSW Procurement, it will be referred for expert determination. This more formal process will need a higher level of detailed documentation, correspondence and records.

Approved suppliers

Website: Maxxia

Natalie Paul
Phone: 0409 934 480 / 02 8899 3564
Email: natalie.paul@maxxia.com.au

Sales and general enquiries
Phone: 1300 123 123
Email: info@maxxia.com.au

Website: NLC

Alex Dronsky - Relationship Manager
Phone: 02 9098 2106 or 0499 010 988
Postal address: Level 2, 3-20 Bridge Street Pymble NSW 2073
Site address: Level 2, 3-20 Bridge Street Pymble NSW 2073 
Email: alex.dronsky@nlc.com.au

Jon Simson – Business Development Manager
Ph: 03 8699 7044 or 0418 535 999
Email: Jon.Simson@nlc.com.au

Website: Smartsalary Pty Ltd

Maria Cavallo
Phone: 1300 855 538 or 0423 774 930
Address: Level 8, 133 Castlereagh Street Sydney NSW 2000
GPO Box 4244, Sydney  NSW  2001
Email: customerservice@smartsalary.com.au
Email: maria.cavallo@smartsalary.com.au

Code of behaviour

For subcontractors or employees of a contractor (i.e. a person engaged by a third party, not by the school directly), the contractor needs to confirm to the Principal in writing that the subcontractor or employee has met any relevant requirements under the Child Protection (Working with Children) Act 2012 before the person commences work on school premises. Names and DOBs should be provided in writing so that a search of the NTBE database can be carried out in eCPC.

Selecting a provider

The employer will decide whether to administer salary packaging in-house or engage one or more salary packaging providers approved under this contact to administer all or part of their packaging scheme.

Employers may engage different providers to administer different benefits if they choose.

Employers should note this may result in additional administration. Issues which employers may consider when selecting a provider include price, customer service levels, complaint resolution procedures, systems infrastructure and support services.

To assist with comparing price, employers may wish to seek quotes from providers for the monthly cost of providing novated motor vehicles. Employers should specify a small range of typical vehicles. To ensure quotes can be compared employers should specify whether the lease is for a fully maintained vehicle (option 4 under 2.4b of this guide), whether the vehicle has standard equipment and paint, whether the vehicle is manual or automatic, and be plated for the same date.

The provision of salary packaging to eligible employees must be at no cost to employers. Salary packaging providers will charge employees an administration fee. Where the administration service is outsourced, the salary packaging fees are subject to their tender prices as detailed in section 7.

Employers should communicate their choice of provider and that provider’s contact details (section 6) to employees to enable employees to contact the provider directly.

The salary packaging provider will publish a procedure manual outlining all aspects of the salary packaging scheme on their website. In some cases, the provider may develop a Manual suited to the needs of specific employers. The manual should include all information to allow prospective participants to make informed decisions and provide the necessary forms and documentation for participation.

Transition arrangements

An employer who is currently outsourcing their salary packaging arrangements may wish to select a new provider from those on the panel under this contract.

Employers are advised to speak to the new provider about the arrangements involved in, for example, transferring data between providers, what actions the employer may need to take, and the timeframe involved. It may be advisable to obtain a written “transition plan” from the new provider.

Employees who are currently packaging a car under a novated lease may suffer a financial penalty if they were required to terminate the lease because their employer wishes to change salary packaging providers.

Maxxia (formerly McMillan Shakespeare), which was the sole provider under the previous contract, has agreed to an arrangement whereby an employee would continue to lease the car through Maxxia and the salary package would be administered by the new provider. This will involve an exchange of data between new and old providers. Further information will be available from the new provider.

Pricing

Maxxia Pty Ltd

Item No.

Description Price tendered (GST exclusive) GST component Total price tendered (GST inclusive)
1One benefit only that does not attract FBT excluding a motor vehicle lease $1.92 per participant per fortnight $0.19 per participant per fortnight $2.11 per participant per fortnight
2Two or more benefits only that do not attract FBT excluding a motor vehicle lease $1.92 per participant per fortnight $0.19 per participant per fortnight $2.11 per participant per fortnight
3A motor vehicle lease only $6.37 per participant per fortnight $0.67 per participant per fortnight $7.04 per participant per fortnight
4A motor vehicle lease and any other benefit $6.37 per participant per fortnight $0.67 per participant per fortnight $7.04 per participant per fortnight
5One or more benefits that attract FBT and any other benefits that do not incur FBT $1.92 per participant per fortnight $0.19 per participant per fortnight $2.11 per participant per fortnight
6One or more benefits that attract FBT $1.92 per participant per fortnight $0.19 per participant per fortnight $2.11 per participant per fortnight
7Package amendment fee $0 per occurrence $0 per occurrence $0 per occurrence
8Re-establishment fee $0 per occurrence $0 per occurrence $0 per occurrence

NLC Pty Ltd

Item No.

Description Price tendered (GST exclusive) GST Component Total price tendered (GST inclusive)
1One benefit only that does not attract FBT excluding a motor vehicle lease $0 per participant per fortnight $0 per participant per fortnight $0 per participant per fortnight
2Two or more benefits only that do not attract FBT excluding a motor vehicle lease $0 per participant per fortnight $0 per participant per fortnight $0 per participant per fortnight
3A motor vehicle lease only $0 per participant per fortnight $0 per participant per fortnight $0 per participant per fortnight
4A motor vehicle lease and any other benefit $2.88 per participant per fortnight $0.288 per participant per fortnight $3.17 per participant per fortnight
5One or more benefits that attract FBT and any other benefits that do not incur FBT $0 per participant per fortnight $0 per participant per fortnight $0 per participant per fortnight
6One or more benefits that attract FBT $0 per participant per fortnight $0 per participant per fortnight $0 per participant per fortnight
7Package amendment fee $0 per occurrence $0 per occurrence $0 per occurrence
8Re-establishment fee $0 per occurrence $0 per occurrence $0 per occurrence

Smartsalary Pty Ltd

Item No.

Description Price tendered (GST exclusive) GST Component Total price tendered (GST inclusive)
1One benefit only that does not attract FBT excluding a motor vehicle lease $3.15 per participant per fortnight $0.31 per participant per fortnight $3.46 per participant per fortnight
2Superannuation $1.82 per participant per fortnight $0.18 per participant per fortnight $2.00 per participant per fortnight
3Two or more benefits only that do not attract FBT excluding a motor vehicle lease $3.15 per participant per fortnight $0.31 per participant per fortnight $3.46 per participant per fortnight
4A motor vehicle lease only $6.29 per participant per fortnight $0.63 per participant per fortnight $6.92 per participant per fortnight
5A motor vehicle lease and any other benefit $6.29 per participant per fortnight $0.63 per participant per fortnight $6.92 per participant per fortnight
6One or more benefits that attract FBT and any other benefits that do not incur FBT $6.29 per participant per fortnight $0.63 per participant per fortnight $6.92 per participant per fortnight
7One or more benefits that attract FBT $6.29 per participant per fortnight $0.63 per participant per fortnight $6.92 per participant per fortnight
8Package amendment fee $0 per occurrence $0 per occurrence $0 per occurrence
9Re-establishment fee $0 per occurrence $0 per occurrence $0 per occurrence

Government taxes and charges

All taxes, duties and charges imposed or levied in Australia or overseas in connection with the performance of this agreement will be borne by the supplier.

Third party purchasing

Clause 6 of the Public Works and Procurement Regulation 2019 allows the NSW Procurement Board to provide access to suppliers of public sector bodies to state contracts standing offer agreements for the provision of goods and services. These suppliers are known as Nominee Purchasers. The public sector bodies making the nominations are known as Nominating Agencies.

'Nominee Purchaser' means a supplier to a public sector agency, nominated by the public sector agency to be authorised to place Orders under Standing Offer Agreements for works done as such a supplier and registered by NSW Procurement.

Access of nominee purchasers to NSW Government contracts standing offer agreements:

  • is limited to standing offer agreements relevant to the contract between the nominating agency and the nominee purchaser, and which are specifically listed in the nominee purchaser’s registration and
  • is for a fixed period of registration, usually ending on the completion of the term of the contract between the nominating agency and the nominee purchaser.

A nominee purchaser must not purchase goods or services under a NSW Government contract standing offer agreement, unless they are related to its obligations under a contract with a public sector agency and are used during the term of such a contract or included or incorporated in works, goods or services to be provided to the public sector bodies.

Frequently asked questions

How is an employee’s salary package administered?

Prior to commencing salary packaging, employees are required to sign a salary packaging agreement with their employer. This agreement is at appendix C. This agreement is in addition to the salary packaging agreement between the employee and the provider.

Generally, each employee will operate their salary packaging arrangements within a “package year”. Irrespective of when packaging commences, the “package year” ends on 31 March in order to comply with FBT year reporting requirements. Each new “package year” is for 12 months and commences on 1 April. Employees may review and vary their benefits within each “package year”. However, additional administration fees may be incurred.

The following funds will be deducted from an employee’s salary over an agreed pay period to cover the cost of the salary packaging arrangement:

  • the cost of their chosen benefits
  • any FBT that applies to those benefits
  • the administrative fee that applies to the benefits
  • any post-tax employee contribution.

Regular payments

Benefits that have a fixed instalment amount and occur on a regular basis will be paid as a regular payment. Employees will be required to supply the following information to their service provider:

  • the name and address of where payments are to be made
  • the frequency of the payments
  • the payment amount
  • the commencement date for regular payments
  • the employees banking details including BSB and account number for regular EFT payments.

Non-regular payments

These payments are for benefits which do not have a fixed instalment amount or do not occur on a regular basis. Payments will be made on receipt of a written claim, for example in the case of a payment to register a motor vehicle.

An employee who directly pays for the cost of a benefit will also be reimbursed on receipt of a written claim. Reimbursement will usually be made to the employee’s nominated bank account.

Changing the agreed salary package

Individual employees may change their agreed salary package at any time. However, additional administration fees may apply.

Employees will be able to change their agreed salary package at least once during the salary packaging year free of charge.

Benefit payments - terms and conditions

Generally, a salary packaging provider will not reimburse benefit costs which were incurred and paid for prior to the commencement of the flexible salary package. However, costs which were incurred prior to the commencement of the flexible salary package but paid for after the commencement of the package may be reimbursed.

Payment of benefit items will only be made where there are sufficient funds in an employees account at the time payment is due. Employees will not be able to obtain reimbursements for benefits payments made by themselves unless they have accumulated sufficient funds to cover these costs. Employees may however incur the expense and hold back their claim until they have accumulated sufficient funds. At that time a reimbursement will be made.

A salary packaging provider will cease to pay any benefit when the total yearly allocation for that benefit has been expended. Therefore, when deciding the amount of money to allocate to any particular benefit, employees may wish to provide an additional amount to meet any increases in the cost of that benefit during the Salary Package year.

A reconciliation of the employee’s flexible salary package will take place at the end of each package year. Any benefit entitlement not paid will be rolled over to the next package year, unless the employee seeks reimbursement of the excess available.

If an excess credit exists in the employee’s package account, and the employee does not wish to leave that amount in the account to be rolled over to the next package year, then a claim can be made against the package account. The refund will normally be processed as cash salary through the payroll system and income taxed.

What happens if a participant’s employment circumstances change?

Reduced salary

A participant’s employment arrangements may alter while they are salary packaging. It is the responsibility of both the employee and the employer to notify the salary packaging provider if an employee’s salary will be reduced. Reasons for a salary reduction may include:

  • A workers compensation claim - Further detail on workers compensation claims is in section 3.2a.
  • Leave on half pay or unpaid leave - In most instances, approval of any period of leave without pay of more than five days will require the employee to cease salary packaging.
  • Suspension without pay- If an employee is suspended without pay, any salary packaging arrangements will cease.
  • A change from full-time to part-time employment - Where an employee ceases full time employment and enters into a new agreement with the employer to work part time, the existing salary package will cease from the commencement of part time employment, and a new salary packaging agreement will have to be negotiated.

Where possible, the salary packaging provider should be notified in advance of the date the salary will reduce to enable the necessary arrangements to be made.

With the approval of the employer, salary packaging can recommence once the employee returns to full time employment.

Note that employees who are promoted, redeployed, transferred or seconded to another employer are subject to the policies and arrangements that apply with the new employer.

Workers compensation

Payment of salary whilst absent from duty is made from an employee’s entitlement to paid leave (sick and/or extended). If an injured employee makes a claim for workers compensation and the fund manager accepts the claim, payment is made to the agency for the time lost. Leave is then re-credited.

After 26 weeks of payment for time lost the payment from the fund manager reduces to the statutory rate. The employee is able to make up salary to the full time rate by using up paid leave entitlements.

Salary packaging may only continue whilst the employee is able to maintain salary at the full time rate. The existing salary package is to cease:

  • if the employee has insufficient paid leave entitlements to maintain salary whilst the fund manager makes a decision to accept the claim; or
  • when the employee is reduced to only the statutory rate of payment.

Any shortfall in funds which occurs due to reduced salary is the responsibility of the employee.

Cessation of employment

From the date employment ceases the salary packaging provider will cease all benefit payments. Upon becoming aware of the date:

  • employment ceases for whatever reason; or
  • an employee is promoted, redeployed, transferred or seconded into a position in an agency that does not offer salary packaging.

The employer and employee must immediately notify the salary packaging provider and advise the last payment date. The salary packaging provider will send final payments and determine any action to be taken with account balances. Any remaining balance can be paid as a lump sum towards an existing benefit item, or paid to the employee as salary and taxed accordingly.

Appendices and other related information