How does it work?

The art of paying for approved expenses from your gross wage, legally reducing your taxable income and paying less tax.

Have you heard of salary sacrificing or not quite sure if it applies to you as a contractor?

The Australian Taxation Office defines salary sacrificing as an arrangement between an employer and an employee, where the employee agrees to forgo part of their future entitlement to salary or wages. This is in return for the employer providing them with benefits of a similar value.

Salary sacrificing is a great way to optimise your earnings, and we have studied the art of paying for approved expenses from your gross wage to lower your taxable income, so you end up paying less tax.

While there’s no restriction on what type of items that can be salary sacrificed, the items fall into three categories: Superannuation, Exempt Benefits and Fringe Benefits.

  • Items in the Superannuation and Exempt Benefits categories are covered by OpenTalent Consulting, as these provide the best financial benefit for employees and are tax-effective purchases.
  • Items in the Fringe Benefits category are not covered by OpenTalent Consulting, as these items incur Fringe Benefits Tax which removes all financial benefit, increases complexity and increases tax compared to just buying these items with your after-tax wage.

To gain a better understanding of salary sacrificing, we recommend that you chat with us to determine how it can apply to your situation, review information provided by the Australian Tax Office and talk with your accountant.

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Living Away From Home Allowance

The Living Away From Home Allowance (LAFHA) is a regulated allowance from the Australian Tax Office that is available for contractors who live away from their usual place of residence for work. This allowance is designed to compensate for additional expenses incurred and any disadvantages suffered because the duties of employment require contractors to live away from their normal residence.

The allowance has a few rules and conditions to abide by, but it means that the following costs can be claimed as a salary sacrifice deduction, which can significantly reduce your taxable income:

  • Food
  • Rent including temporary accommodation
  • Travel expenses to your new location
  • Connection of utilities, such as gas and electricity
  • Initial setup costs incurred when you are required to work away from home.
  • Other costs incurred as result of working away from home, where otherwise you would not have incurred these costs

When claiming this allowance, we require you to keep and submit your receipts and tell us when you’re moving so we can help you claim the amazing benefits from this allowance.

 

HOW DO YOU CLAIM LAFHA?

You can claim the allowance for a maximum period of 12 months, if you are required to live away from your normal place of residence to perform your duties of employment.

The main condition of this allowance is that you always maintain your usual residence and have it available for use while you are away. This means you cannot rent out your normal residence when you are claiming the Living Away From Home Allowance.

Chat with us for more information and advice to determine how the Living Away From Home Allowance can benefit you.

Why choose OpenTalent Consulting?

Guaranteed Pay Day

Guaranteed Pay Day Every Single Week!

You can also accrue leave and be paid when you have days off including public holidays.

100% Transparent Fees

We charge a flat 2.5% fee and no setup/exit fees!

This fee covers your insurances, salary packaging and our amazing benefits program.

Optimised Payroll

Minimise Tax and Increase Your Take-Home Pay!

We optimise your income and provide exclusive rewards, benefits and valuable advice.

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