Employer’s Guide to Salary Packaging

If you’re a doctor who manages your own private practice and employs staff, salary packaging is definitely something that you should know about.

If you’re not already familiar with salary packaging, this is where an employee agrees to receive a lower salary after tax, in exchange for other benefits that will be paid for by their employer out of their salary pre-tax. These benefits might include a car, phone, laptop, flights or accommodation costs, professional association membership fees, or shares. Salary packaging might also include additional superannuation contributions or payment for other expenses (such as loan or debt repayments or childcare costs).

Salary packaging has many benefits for employees, but it has many advantages for employers too. If you’re a doctor who manages your own private practice and employs staff, setting up salary packaging for your employees can actually save you potentially hundreds of dollars per employee each year. This is because you are allowing employees to purchase the equipment they need for work themselves via the salary package. This can help you to reduce the level of risk and potential future expense involved, compared to if you were to purchase the equipment yourself.

Another advantage of salary packaging is that these programs are popular with employees for the many benefits that they offer. When you recruit for new roles, advertising that you offer salary packages will make your clinic or practice more attractive to prospective employees. This can also go a long way in boosting staff morale for staff who are already working at your company. Both of these things will make it easier for your clinic or practice to attract and retain the best talent. As with anything though, salary packaging can also come with some disadvantages, which you will need to take into account when deciding whether offering this kind of packaging is in the best interests of you and your clinic or practice.

For example, for many smaller practices and clinics, you might find that the savings that you make are very small once these benefits are all paid out. Also, it can be a relatively complex and time-consuming process to actually set up and implement a salary packaging program. Most clinics and practices who offer such a package to their employees will have an accountant or other specialist firm who are responsible for handling this, which of course is another added expense. Again, this may make setting up a salary sacrifice packaging program too costly for many smaller clinics and practices.

Finally, there is always the risk that salary packaging could leave you paying more in the long run, if one of your employers were to go on maternity leave or sick leave for an extended period. Because you would still be liable to pay for any equipment you were offering as part of their salary package, you would still be left paying this off even whilst they were not working. For this reason, it is advisable to consult with a professional financial advisor before setting up a salary sacrifice packaging program for your clinic or practice, to make sure it is actually worth it for you from a business and financial health perspective. They will be able to look at your practice’s current financial situation and financial goals in more detail, and provide personalised advice on whether setting up a salary packaging program is the best choice for you.

To find out more about how you and your practice could be benefitting from a salary packaging program, book an appointment with Medical Wealth Management today. Our highly experienced team of medical finance professionals are skilled in all areas of financial management for medical practices, and can help you to develop a salary packaging program that benefits you as well as your employees.