Finance expert and Chief Market Analyst at AvaTrade, Kate Leaman, speaks with The Sydney Morning Herald to unpack the pros and cons of salary sacrificing. While highlighting its potential tax advantages and mutual benefits for employers and employees – such as exchanging salary for items like a car, phone or laptop – she airs on the side of caution and warns that not all salary sacrificing agreements are made equal.
Leaman’s main advice? Weigh the pros and cons carefully and ensure the arrangement delivers “measurable benefits both now and later.” She shares if you’re struggling to cover essentials like rent or groceries, or don’t genuinely need the offered perks, salary sacrificing may not be the right move. She also noted that It is important to remember if you reduce pay through salary sacrificing, you will continue to receive that lesser amount when on holiday or sick leave. “Just because it saves tax doesn’t mean it’s valuable,” she says.
Ultimately, Leaman advises for employers and employees to look at the full financial picture – costs, obligations and how it aligns with lifestyle – before committing.
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