The phrase denotes a tool used to estimate the financial implications of acquiring a vehicle through a salary sacrifice arrangement in Australia. This arrangement involves an employee foregoing a portion of their pre-tax salary in exchange for the benefit of a car, with associated running costs often included. The calculator typically takes into account factors such as vehicle price, expected annual mileage, finance interest rates (if applicable), and the individual’s income tax bracket to provide an estimate of potential savings and net costs.
The use of such tools can be valuable in determining the financial viability of a salary sacrifice car arrangement. Potential benefits include reduced taxable income, leading to lower income tax liability. Furthermore, goods and services tax (GST) savings on the purchase price and running costs may be realized. The historical context lies in the evolution of employee benefits packages, with salary sacrificing becoming a common method to enhance employee compensation while offering tax advantages. However, it’s important to understand the potential implications on superannuation contributions and other salary-related benefits.
