The contract provides for a panel of Providers from which salary packaging administration services may be contracted. The Providers will contact employers to market their salary packaging services. Alternatively, employers may contact the providers directly. The panel members are:

• SmartSalary Pty Ltd 
• nlc Pty Ltd 
• McMillan Shakespeare Australia Pty Ltd

Contact details are listed in question one in the Attachment to this Circular.
Employees should contact their Human Resources Manager to determine which, if any, Provider their employer has selected before approaching the Providers.

The Attachment to this Circular provides information on some of the requirements of the new contract. It also outlines some issues that employers may wish to consider. Non-SES employees now have approval to package mobile phones which are primarily used for business purposes.

NSW Supply is responsible for administering the contract and managing the performance of the Providers. A User Manual should be available shortly on the Commerce website at www.supply.dpws.nsw.gov.au . Agencies can also access the User Manual for contract 6036 which expired on 31 March 2007. 

Enquiries regarding the administration of the contract may be made to Ms Kim Chamberlain from the Vendor Management Group in Commerce on 9372 7679. 

C Gellatly
Director-General

Issued : Workforce Policy and Advice ( Public Employment Office)
Contact: Robyn Parnell, Senior Adviser and Paul Petersen, Senior Adviser
EMail: [email protected] or [email protected] 
Telephone no: 9228 4152   or 9228 3929  Facsimile:    92283622 efax: 8243 9490
File no: PSM/00361-17
Date:  11 April 2007

This circular has superseded Circular no.C2002-61 and  C2003-26 
___________________________________________________________

QUESTIONS ON SALARY PACKAGING And THE SALARY PACKAGING CONTRACT

1. How do we contact the providers?
SmartSalary Pty Ltd  
Employer Contact 
Contact Tony Ghosn, Business Development Manager
Telephone 1300 665 855  Mobile 0421 229 250
Email [email protected]

Employee Contact 
Telephone 1300 4 SMART (1300 476 278) 8:30 am to 5:30 pm Monday to Friday
Facsimile (02) 9299 4669
Email [email protected]
Internet http://www.smartsalary.com.au

nlc Pty Ltd 
Employer Contact 
Contact  Adam Wilson 
Telephone 03 8699 7003  Mobile 0418 535 999
Facsimile 03 8699 7103
Email [email protected]

Contact  Jitka Stankiewicz 
Telephone 03 8699 7017  Mobile 0438 073 982
Facsimile 03 8699 7117
Email [email protected]

Employee Contact
Contact Adam Wilson
Telephone 03 8699 7003 Mobile 0418 535 999
Facsimile 03 8699 7103
Email [email protected]
Internet www.nlc.com.au

Contact  Jitka Stankiewicz 
Telephone 03 8699 7017  Mobile 0438 073 982
Facsimile 03 8699 7117
Email [email protected]
Internet www.nlc.com.au

McMillan Shakespeare Australia Pty Ltd 
Employer Contact 
Contact  Maresa Annand  Business Manager 
Telephone 03 9635 0123  Mobile 0421 372 389
Facsimile 03 9635 0011
Email [email protected]

Employee Contact
Telephone  1300 735 363
Facsimile (03) 9635 0011
Email [email protected]
Internet www.msa-online.com.au/SalaryPackaging.asp

2. Which agencies must use the contract?
All NSW Government agencies, other than State Owned Corporations, must use this contract if they outsource any of their salary packaging administration. The requirement to use State Contracts Control Board (SCCB) whole-of-government contracts, where they are available, was advised in Premier's Memorandum 2006-11.

3. Which agencies may use the contract?
Agencies which may use the contract include:

• Universities and other educational institutions
• Local government
• Private schools
• Charities
• Commonwealth, other State or Territory public sector agencies.

4. Who chooses which contractor on the panel will provide salary packaging administration services for the agency?
Agencies choose which contractor or contractors to select from the panel of Providers. Where agencies choose more than one Provider, employees may choose which of those contractors will provide their salary packaging services.

5. Can agencies provide some or all of the salary packaging administration services in-house?
Yes. Salary packaging can be administered in-house provided there is no additional cost to Government. Therefore, packaging administration fees may be charged to individual packages. As advised in Premier's Department Circular 2006-08, however, it is envisaged that most agencies implementing salary sacrifice to superannuation in-house would be able to do so on a fee free basis for employees.

6. What happens to existing novated motor vehicle leases if agencies change contractors?
Existing novated leases can continue. Employers should discuss how these leases will be administered with prospective Providers. One option is for the lease to remain with the former Provider and be administered by the new Provider who would be paid the administration fee. An alternative option is for the lease and the administration of that lease to remain with the former Provider for the duration of the lease. 

7. Are there any other issues which agencies should consider in the transition from one contractor to another?
Employers should discuss the way in which prospective Providers will obtain and verify salary packaging data, including FBT data. One of the issues employers may wish to consider is the extent of employer involvement in this process.  

8. Which employees are eligible to participate?*
Salary Packaging is available to:

• Permanent employees including permanent part-time employees and
• Temporary employees subject to Agency convenience.

Casual employees are eligible to salary sacrifice to superannuation subject to Agency convenience.

* This policy applies to non-SES employees in agencies listed in Part 1 Schedule 1 of the Public Sector Employment and Management Act 2002 NSW And any other agencies with employees covered by the Crown Employees (Public Sector - Salaries 2004) Award and its successors and the Crown Employees Wages Staff (Rates of Pay) Award 2005 and its successors. Other agencies may negotiate their own policies, with reference to the Premier's Department where agencies consider there may be sector wide implications.

9. What benefits may be packaged?*

• additional contributions to First State Super
• additional contributions to other complying superannuation funds
• motor vehicles (one 100% private novated lease only)
• housing (remote areas only)
• child-care (in-house only)
• priority of access fee for child care
• professional subscriptions
• taxi expenses
• mobile phones (mainly used for business purposes)
• education (self and professional)
• laptops, e-organisers and brief cases

The only change to the list of benefits is the inclusion of mobile phones which must primarily be used in the employee's employment.

Employers who comply with Premier's Department salary packaging policy (refer *) should note that only these benefits may be offered to employees. If Providers offer additional benefits, for example Easilease or Fude Card, they should be advised to contact the Premier's Department.

As advised in Circular 2006-08, employees may package up to 100% per cent of their gross salary. Employees will need to pay post-tax commitments and payroll deductions before determining the availability of salary for packaging purposes.

10. What are the options for packaging a novated lease?
There are 4 ways in which a novated lease may be packaged.

• Option 1 Employee enters into agreement with contractor to arrange all aspects of finance and a management budget
• Option 2 Employee selects own financier and enters into maintenance agreement with contractor
• Option 3 Employee arranges own maintenance and enters into agreement with contractor to arrange finance.
• Option 4 Employee selects own financier and arranges own maintenance (self managed lease)

11. What financiers can be used to finance novated leases?
Providers must advise agencies which financiers they have selected to be on their panel of financiers. This advice will usually be in the contractor's salary packaging guide on their website.

One of the criteria for inclusion on the panel is that financiers must use the NSW Crown Solicitor's Office Deed of Novation (refer Premier's Department Circular 2003-51). 

Contractors must advise the State Contract Control Board, NSW Premier's Department and all potential participants about any change to the panel of authorised financiers within 5 business days.

12. What packaging rules apply to novated leases?*

• All novated motor vehicles will have their Fringe Benefits Tax (FBT) liability calculated using the Statutory Formula Method.
• The Statutory Fraction used for calculating the FBT liability will be 20%, except where an existing participant has a proven record of his or her vehicle travelling distances which indicates a different statutory fraction is appropriate. A proven record means that the participant must complete a travel diary for 12 successive weeks, or for some other period which is consistent with ATO guidelines or procedures.
• FBT applying to packaged items will be calculated using the lower type 2 gross-up rate which is currently 1.8691 and employees will not be entitled to any Input Tax Credits (ITC) that may be available to Agencies (refer Premier's Department Circular 2000-46).
• Employees may elect to make after-tax contributions using the Employee Contribution Method (ECM).
• Contractors will provide information and counselling to participating employees where necessary on package variations where quarterly monitoring of distance travelled and after-tax employee contributions or payments indicates that salary packaging estimates are not being met.
• If salary packaging estimates are not being met, and particularly if an FBT shortfall is identified, the Contractor will contact the employee within 14 business days indicating that remedial action needs to be taken. Where appropriate, the contractor will request payroll administrators to adjust the deductions for FBT or ECM where required, and inform the employee of the action taken.

13. What is the complaints process?
The Providers are required to implement the complaints handling procedure that is detailed in Attachment C.  This form is likely to be available on the Providers' websites.

14. How much are the administration fees?
The administration fees for the three Providers are listed in Attachment A. Note that in certain circumstances volume discounts may apply. 

A minimum of one change to an employee's salary packaging arrangements, in addition to any end of FBT year adjustments, is permitted without charge.

15. How often are the administration fees remitted? 
Payment frequency should be negotiated with the Provider. Employers must make regular payments to the Provider within fourteen days of receiving a valid Tax Invoice.

Employers are required to collect the annual administration fee on a pro-rata fortnightly basis. (ie divide the annual fee by the relevant number of fortnightly pay periods). Note that the full annual administration fee is payable by each employee who commences salary packaging.

16.  What reports will the contractor provide?
The Provider is required to provide the reports listed in Attachment B.

17. What forms are required when employees sign up for salary packaging?
In addition to agreements signed between the participant and the Provider, participants and employers must sign an agreement relating to the operation of the Salary Packaging Scheme. A copy of this form is in Attachment D and will be included made available by the Providers.

18. Should employees obtain financial advice before entering into a salary packaging agreement?
Employees should be strongly encouraged to obtain independent financial advice prior to entering into a salary packaging agreement. In particular, employees should carefully consider how changes in some of the packaging variables, such as changes in marginal income tax rates or distance travelled, would affect the outcome of the packaging arrangement. Employers should not endorse specific financial advisers.

19. What information/resources will be available to help employees understand salary packaging and the salary packaging services offered by a Provider?
Providers are required to publish a comprehensive user guide outlining all aspects of the salary packaging scheme on their website.

20. Will there be a dedicated person provided by the contractor to deal with any issues that may arise?
Providers will appoint a dedicated Account Manager to liaise with Human Resources and Finance Units in relation to the supply of data, and to resolve any issues that arise. Providers will also nominate a contact officer to liaise with employers on general matters with same day response by phone or email. Employers should confirm who these people are with their chosen Provider.

21. What happens if an employee takes voluntary redundancy, changes their hours of employment or moves employers?
In any of these cases, the employer and employee must immediately notify the Service Provider.

Where the employee ceases employment, or moves to an employer that does not allow them to salary package, the Service Provider will arrange for final payments to be made and inform agencies of any outstanding liabilities which could be recovered from pay entitlements. In relation to a car packaged under a novated lease, employees will have responsibility to comply with the terms of the lease. (Employers that do offer salary packaging may allow the employee to enter into a new novation arrangement.)

Where an employee changes from full-time employment to part-time employment or casual employment, the existing salary package will cease and a new salary package will need to be negotiated. The agency and the employee are responsible for advising the Service provider of the change in employment arrangements.

ATTACHMENT A - Administration Fees

ATTACHMENT B - Summary of Reports

ATTACHMENT C - 3 step dispute resolution procedure - Salary Packaging (Contract 0601745)

ATTACHMENT D - Deed of Undertaking - please see the word file version of this circular for attachment D Employers Salary Packaging Scheme Deed