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Understanding the basic features
of the Employee Benefits Card
How much can I save?
Employees of Public and Not for Profit Hospitals
Employees of these organisations are
able to spend $9,095 tax free each FBT year. The following table
indicates the tax saved each year (includes $160 annual fee).
| Savings you
can make every payday |
| Salary |
$25,000 |
$30,000 |
$35,000 |
$40,000 |
$45,000 |
$55,000 |
$65,000 |
| Annual
Saving |
$1,500 |
$1,500 |
$2,250 |
$2,864 |
$2,864 |
$2,864 |
$2,864 |
| Monthly
Saving |
$125 |
$125 |
$188 |
$239 |
$239 |
$239 |
$239 |
| Fortnightly
Saving |
$57.69 |
$57.69 |
$86.54 |
$110 |
$110 |
$110 |
$110 |
(Based on Tax Rates effective July 2007)
Employees of other PBI's
Employees of these organisations are
able to spend $16,050 tax free each FBT year. The following table
indicates the tax saved each year (includes $160 annual fee).
| Savings you
can make every payday |
| Salary |
$25,000 |
$30,000 |
$35,000 |
$40,000 |
$45,000 |
$55,000 |
$65,000 |
| Annual
Saving |
$2,783 |
$2,858 |
$3,398 |
$4,148 |
$4,898 |
$5,056 |
$5,056 |
| Monthly
Saving |
$232 |
$238 |
$283 |
$346 |
$408 |
$421 |
$421 |
| Fortnightly
Saving |
$107 |
$110 |
$131 |
$160 |
$188 |
$194 |
$194 |
(Based on Tax Rates effective July 2007)
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What is the Employee Benefits Card?
The Employee Benefits Card is a MasterCard that has
been purpose designed for use in Public and Not-for-profit Hospitals,
Aged Care, Charities and Not-for-profit employers who qualify as
a Public Benevolent Institution (PBI).
The card allows employees to access tax free expense
payment fringe benefits and eliminates the need to keep paperwork
and reimbursements. You can spend your money immediately it is deposited
on to the card.
Like any MasterCard it can be used anywhere in the
world to pay for everyday expenses, where MasterCard is accepted.
However, unlike other MasterCard's, the EBC™ provides
no credit and cannot be used to draw cash advances or to establish
direct debits.
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How does the card work?
The Employee Benefits Card (EBC™) is a Credit
Card that operates on a pre-paid basis and limits expenditure to
the funds available.
As a cardholder you are primarily liable for amounts
spent on the card.
The following steps summarise how the EBC™ is
established and operates.
- Your employer establishes an EBC facility with
Westpac which enables employees to apply for an EBC™ under
a salary sacrifice agreement entered into with the employer.
- Employees apply for an EBC™ card.
- An agreed salary sacrifice amount is transferred
each pay cycle by the employer through the electronic banking system
to the employee’s EBC™ account.
- The employee uses the EBC™ to pay for expenses.
Expenditure amounts are limited to the available funds established
by the salary sacrifice transfers. Funds in the account are only
accessible through incurring expenses on the Card and no cash advances
are available.
- Each month cardholders receive a statement of
amounts spent and the balance of the account is discharged with
the salary sacrifice funds available. Any remaining funds available
each month are carried forward and added to subsequent salary sacrifice
transfers.
- On termination of a card, including termination
of employment, the EBC™ is cancelled.
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Where can you use the Employee Benefits Card?
PAYMENT
METHOD |
ACCEPTABILITY |
Point of Sale
merchant payments
|
Yes |
Merchant Internet
Payments
|
Yes |
By phone direct
to merchant
|
Yes |
POST billpay
|
Yes |
| (Whenever
you are asked by a merchant to select an account, you should
select “CREDIT”.) |
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Can cash be drawn from the card?
No. Cash withdrawals are electronically barred.
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Can the card be used to pay mortgages or other items
by direct debit?
No. All financial institutions process direct debits
without checking available funds. This would create a debit position
on the card and permit possible overspending by an employee.
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Can the card be used to pay another Credit Card?
No - Australian financial regulations do not allow
a credit card to be used to pay the debt on another credit card.
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Where can the card be used?
The card can be used;
(a) |
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Everywhere MasterCard is accepted; |
(b) |
|
Telephone payments to any merchant’s
internet site or telephone payment line; |
(c) |
|
Using Australia Post BillPay system. |
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Can the employee pay after tax money into the card?
No.
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Can the card be used overseas?
Yes, the card can be used wherever MasterCard is
accepted.
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What is the impact on my income?
HECS repayments, Family Assitance, Child Support and certain other entitlements are calculated on your ‘adjusted taxable income’. That is, your salary plus the 'grossed-up value' of your fringe benefits (salary packaging).
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How does adjusted taxable income affect HECS payments and other emtitlements?
The impact of your adjusted taxable income on HECS and other entitlements will vary depending on your personal circumstances and the various rules that apply. You should seek independent advice having regard to your particular circumstances. However by way of illustration, the tables and graphs below look at the impact on HECS repayments.
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EXAMPLES
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1. |
Where the $17,000 grossed-up limit applies |
$ |
A |
Employee’s salary |
= |
30,000 |
B. |
Amount salary packaged |
= |
9,095 |
C. |
Salary remaining after salary packaging (A-B) |
= |
20,905 |
D. |
Grossed-up equivalent of $9,095 (B x 1.86920) |
= |
17,000 |
| ADJUSTED INCOME = |
Salary + Grossed-up equivalent (C + D) |
= |
37,905 |
|
| |
2. |
Where the $30,000 grossed-up limit applies |
$ |
A |
Employee’s salary |
= |
30,000 |
B. |
Amount salary packaged |
= |
16,050 |
C. |
Salary remaining after salary packaging (A-B) |
= |
13,950 |
D. |
Grossed-up equivalent of $16,050 (B x 1.86920) |
= |
30,000 |
| ADJUSTED INCOME = |
Salary + Grossed-up equivalent (C + D) |
= |
43,950 |
|
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| Although the HECS payments will increase slightly, your take-home pay will also increase even more due to the large reduction in income tax. The result is you will pay off your HECS debt quicker while still having more money each pay period to spend. |
| |
| $17,000 Gross-up |
| Annual
Income |
$25,000 |
$30,000 |
$35,000 |
$40,000 |
$45,000 |
$50,000 |
$55,000 |
$60,000 |
$65,000 |
$70,000 |
| Card spend |
$9,095 |
$9,095 |
$9,095 |
$9,095 |
$9,095 |
$9,095 |
$9,095 |
$9,095 |
$9,095 |
$9,095 |
| Gross-up |
$7,905 |
$7,905 |
$7,905 |
$7,905 |
$7,905 |
$7,905 |
$7,905 |
$7,905 |
$7,905 |
$7,905 |
| Levy income |
$32,905 |
$37,905 |
$42,905 |
$47,905 |
$52,905 |
$57,905 |
$62,905 |
$67,905 |
$72,905 |
$77,905 |
| % before |
0.0% |
0.0% |
0.0% |
4.0% |
4.5% |
5.0% |
5.5% |
6.5% |
7.0% |
7.5% |
| % after |
0.0% |
0.0% |
4.0% |
4.5% |
5.5% |
6.0% |
6.5% |
7.0% |
7.5% |
8.0% |
| Variance |
0.0% |
0.0% |
4.0% |
0.5% |
1.0% |
1.0% |
1.0% |
0.5% |
0.5% |
0.5% |
| $ Variance |
$0 |
$0 |
$1,716 |
$240 |
$529 |
$579 |
$629 |
$340 |
$365 |
$390 |
| Full Saving |
$1,739 |
$1,501 |
$2,251 |
$2,865 |
$2,865 |
$2,865 |
$2,865 |
$2,865 |
$2,865 |
$2,865 |
| Net Saving |
$1,739 |
$1,501 |
$535 |
$2,625 |
$2,336 |
$2,286 |
$2,236 |
$2,525 |
$2,500 |
$2,475 |
|
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 |
| |
| $30,000 Gross-up |
| Annual
Income |
$25,000 |
$30,000 |
$35,000 |
$40,000 |
$45,000 |
$50,000 |
$55,000 |
$60,000 |
$65,000 |
$70,000 |
| Card spend |
$16,050 |
$16,050 |
$16,050 |
$16,050 |
$16,050 |
$16,050 |
$16,050 |
$16,050 |
$16,050 |
$16,050 |
| Gross-up |
$13,950 |
$13,950 |
$13,950 |
$13,950 |
$13,950 |
$13,950 |
$13,950 |
$13,950 |
$13,950 |
$13,950 |
| Levy income |
$38,950 |
$43,950 |
$48,950 |
$53,950 |
$58,950 |
$63,950 |
$68,950 |
$73,950 |
$78,950 |
$83,950 |
| % before |
0.0% |
0.0% |
0.0% |
4.0% |
4.5% |
5.0% |
5.5% |
6.5% |
7.0% |
7.5% |
| % after |
0.0% |
4.0% |
4.5% |
5.5% |
6.0% |
7.0% |
7.0% |
7.5% |
8.0% |
8.0% |
| Variance |
0.0% |
4.0% |
4.5% |
1.5% |
1.5% |
2.0% |
1.5% |
1.0% |
1.0% |
0.5% |
| $ Variance |
$0 |
$1,758 |
$2,203 |
$809 |
$884 |
$1,279 |
$1,034 |
$740 |
$790 |
$420 |
| Full Saving |
$2,783 |
$2,858 |
$3,398 |
$4,148 |
$4,898 |
$5,056 |
$5,056 |
$5,056 |
$5,056 |
$5,056 |
| Net Saving |
$2,783 |
$1,100 |
$1,195 |
$3,339 |
$4,014 |
$3,777 |
$4,022 |
$4,317 |
$4,267 |
$4,636 |
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Can I apply for an additional card in my spouse's or partner's name?
Yes. Just note that a separate $160 annual fee is payable and you need to decide how much will be deposited by your employer to each card (i.e. it is not a linked account).
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