If you live in the country, you could be eligible for extra salary packaging benefits.
The Remote Area Benefit is offered by the Commonwealth Government to assist employers in rural and remote areas to attract and retain staff.
What is the Remote Area Benefit?
The Remote Area Mortgage Interest, Remote Area Rental Payments, Remote Area Housing Purchase and Remote Area Holiday Transport are collectively known as the Remote Area Benefit. Only 50% of these benefits are counted towards your annual living expenses cap. The other 50% is in addition to this, allowing eligible employees to salary package more and increase their amount of take-home pay.
This means your normal salary packaging cap (i.e. either $9,010 for Public Health or $15,900 for Public Benevolent Institutions) can be extended further, giving you an extra saving on tax. Any salary packaging payments made from your pre-tax salary will also reduce the amount of tax applied to your take-home pay, so it is financially a win-win. All Remote Area Benefits are not a reportable benefit and won’t appear on your annual PAYG income statement.
Apply for Remote Area Housing Benefits
What qualifies as remote living?
To qualify, you need to work for an employer and have your primary place of residence located more than 40 kilometres from a town of 14,000 people, or more than 100 kilometres from a town of 130,000 people. You must also live in the property as your main residence.
Your employer must also be in a remote location as defined by the ATO. To put that into a Victorian perspective, you would need to be located more than 40 kilometres from a major Australian town or city such as Ballarat, Warrnambool, Shepparton, Wangaratta or Albury etc. For the full eligibility criteria, check the ATO website here.
Remote Area Mortgage Interest
If you have a mortgage on your home in a remote area, and that home is also your primary place of residence, you can salary package even more of the interest component.
Because 50% of the interest amount is treated as an Exempt Benefit, 50% of your interest is deducted from your pre-tax salary outside of any cap. For example, Amy works for a Public Benevolent Institution and lives and works in a remote area and has a mortgage on a property that is her primary place of residence. She sends through her annual mortgage statement and the total interest paid was $15,700. For the Fringe Benefits Tax (FBT) year (1 April to 31 March), Amy can claim $7,850 through salary packaging and the other 50% on the remote housing benefits cap.
Remote Area Rental Payments
If you rent your home in a remote area that is your primary place of residence, you can salary package the amount of rent you pay up to 50%.
For example, Peter is a nurse with a Public Hospital and pays $8,200 in rent each year. Pete claims $4,100 for the FBT year as part of his cap and the remaining $4,100 he claims as a remote area benefit from his pre-tax salary. The remainder of his cap entitlement can be used to salary package other living expenses.
Remote Area Housing Purchase
You can salary package the costs associated with buying land or a house and land in a remote location. Once again, as long as the land or house and land will become your primary place of residence and the construction of the home is completed within a defined time frame, 50% of your purchase costs is treated as an Exempt Benefit, so 50% of your purchase costs can be deducted from your pre-tax salary.
Remote Area Residential Fuel
You could be saving on household fuel or energy such as gas, electricity and firewood (not motor vehicles). Because 50% of your fuel cost is treated as an Exempt Benefit, 50% of your fuel costs can be deducted from your pre-tax salary.
While this doesn’t apply to motor vehicle fuel, you could always consider novated leasing as a clever way to save on your car’s running and maintenance costs.
Remote Area Holiday Transport
This benefit is designed especially so you can salary package the cost of travel from your remote location to the nearest capital city and help you stay in touch.
This is available to eligible employees and their immediate family such as a spouse, partner and, even if you do not accompany them on the holiday. For example, your children may go and stay with their grandparents for a week while you and your partner stay at your property. You can salary package the children’s travel expenses if they take any form of remote transport. Plus, if some of your immediate family members do not live with you at your remote location, you can also use this benefit to pay for their travel to meet you.
The Remote Area Holiday Transport requires that:
• The holiday is for three or more working days
• The holiday is taken by commercial transport, e.g. airplane, train, bus or ship/ferry
Your questions answered
This can vary based on your location and employer, but the Remote Area Benefit can be used on house purchases, mortgage interest, rental payments, fuel and transport.
You need to work for an employer and have your primary place of residence located more than 40 kilometres from a town of 14,000 people, or more and more than 100 kilometres from a town of 130,000 people. You must also live in the property as your main residence.
Only 50% of the remote area benefits are counted towards your annual living expenses limit, the other 50% is in addition to this. Any salary packaging payments made from your pre-tax salary will also reduce the amount of tax applied to your take-home pay.
Have more questions? Check out our full list of FAQs.
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