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Smart Investing
There is such a thing as a cheap lunch
 November 21, 2007
Robin Bowerman
Discussions about the salary-sacrifice of non-cash employment benefits typically revolve around such big-ticket items as superannuation and cars. But wait a minute.
One of the fastest-growing benefits is the packaging of lunches and accompanying drinks – the tax benefits of packaging do not extent to salary-sacrificed alcohol.
In short, employers can enter arrangements that allow so-called in-house catering to be provided as an FBT-exempt benefit in their employees’ packages. This means that you pay for your lunch on pre-tax terms.
Under the tax rules, the food must be provided by your employer, and eaten on its premises. In practice, employers are increasingly entering arrangements for local shops to deliver the lunches of their employees’ choice from the shops of their choice. And the cost is charged against the employees’ salary packages.
Astute large employers are sending the daily orders through to selected shops electronically, and then the costs are electronically charged against the employees’ packages.
Just think that if your tax-rate is 31.5% a year, including Medicare, you would save almost a third of your lunch costs. This means a typical savings of hundreds of dollars a year for those who buy their lunches each day.
In a tight labour market – unemployment is at a 33-year low – employers have a big incentive to make such benefits readily available to their staff. And from an employee’s perspective, this is smart personal budgeting at one of its most simple levels.
Personal budgeting can begin in saving money in small ways. And slicing the cost of your lunch by almost a third – or more if you pay tax at a higher marginal tax rate – makes much sense.
Here’s to a cheap lunch.
More articles from this edition of CompareShares:
Resident Trader: Lessons from a week rather forgotten
Stocks: Stock picks for the long haul: BHP and Coca Cola Amatil
Superannuation: Putting SMSF eggs in one basket
Commodities: Why oil refiners are getting hammered
Stocks: Stock to watch - Wesfarmers
Markets: Markets over-reacting to US slowdown
Smart Investing: There is such a thing as a cheap lunch
Expert Panel (CFDs): Pairs trading scenarios
Economics: BHP talks Rio value, steelmakers howl
Whatever your views, you can discuss this article - or any of Robin's articles - on our message board Your 2 Cents.
Robin Bowerman is Head of Retail at index fund manager Vanguard Investments Australia and the former managing editor of Shares and Personal Investor magazines. To receive this column by email each week go to http://www.vanguard.com.au/ and register with smart investing.
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