How you can use salary sacrificing to boost sales and reward staff

Want to boost you company’s sales and give staff a Christmas gift at the same time? Then follow the lead from Woolworths and offer $1000 to your employees to spend on your business’s products.

Want to boost you company’s sales and give staff a Christmas gift at the same time? Then follow the lead from Woolworths and offer $1000 to your employees to spend on your business’s products.

Woolworths may generate up to $115 million from a scheme by which permanent staff can salary sacrifice and spend $1000 of pre-tax dollars at the company’s stores (including Woolworths, Dick Smith and Big W) before 9 January 2009.

The scheme is based on a tax concession given to businesses that allows $1000 to be spent by employees on products and services sold by their employer to the general public.

Megan Maybury, principal of accounting advisory firm Prosperity Advisers, says SMEs should consider implementing such a scheme of their own.

“The legislation allows organisations to provide what is called an in-house benefit. An in-house benefit is where an organisation that provides a product or a service to the public can provide that to their employees at concession tax rates.

“Anybody in the retail sector can do this, but also professional services like legal firms who do, for instance, conveyancing. They could salary package that if they use the same services. It’s not just restricted to products.”

If a company does not have an in-house benefit to offer, Maybury suggests offering staff salary sacrifice car packages as an alternative. “One of the most attractive benefits is motor vehicles because they are concessionally taxed.”

On top of this, the poor state of the car market means some dealers are selling vehicles at below cost prices.

But Maybury says employers should be careful. While any business can offer salary packages as long as they are made within existing regulations, they aren’t for everyone.

“There are a number of restrictions as to what kind of benefits can tax-effectively be packaged, and that’s because of the increased legislation restrictions the Federal Government has imposed.

“Businesses probably need to consider the demographic of their employee base. One of the things they need to take into account is whilst anybody can package, you need to have a look at their particular circumstances – they could be worse off,” she says.

“They just need to make sure the package is structured that it is tax effective.”

Related stories:

• Employers can look for Christmas tax concessions
• Cutting back on Christmas