Campaign: Salary Packaging Scheme

Our sector is facing significant challenges in recruiting and retaining skilled professionals due to limited financial resources. Currently there is minimal ability under New Zealand legislation for charities to change the way they pay their teams to help differentiate themselves from the private and government sectors. This is hindering our capacity to attract top talent and support our purpose as community organisations.

That’s why we’re joining forces with Not-For-Profit specialists Grant Thornton in advocating for the adoption of a wider salary packaging scheme.

Why we need this

Community Governance Aotearoa Chairs survey

We surveyed community organisation Chairs throughout Aotearoa New Zealand, they are concerned at the loss of talented staff and the affect it has on service delivery (not to mention the time and effort in recruitment). We are looking for mechanisms that work to keep our people who love and serve our Not-for-Profits, in our sector.

Grant Thornton Not-for-Profit Sector Report (2022)

This report reveals a breaking point is on the horizon for our sector. Whilst Not-for-Profits can quickly adapt to new ways of work like remote and flexible work arrangements, they simply can’t compete with the commercial market salaries. Where Not-for-Profits could once rely on passion and values based workers to make up for shortfalls in remuneration, the rising cost of living and a tight labour market mean the sector is losing out.

What is salary packaging?

Salary packaging is an agreement between employee and employer that relates to how you get paid. It involves an employee receiving less income before tax, but in return the employer covers an additional amount by paying for certain benefits. Swapping a chunk of your pay for other perks.

Australia are already doing it*; allowing employers to offer such benefits as paying for childcare, mortgage payments, rent, school and education fees, and superannuation.

*In Australia this type of scheme is also called salary sacrifice or remuneration packaging.

FAQs

Isn’t this just tax relief?
This isn’t about tax relief, it’s about Not-for-Profit sector employees being valued so they can deliver awesome mahi to the communities they support.

Under this type of agreement, the employer (charities/NFPs/NGOs) provides a designated portion of the employee’s salary in the form of benefits.

The arrangements utilise the Fringe Benefit Tax concessions and exemptions available to Not-for-Profits.

Aren’t we already doing this in New Zealand?
Across the private sector, yes. But our Not-for-Profit sector can’t always match the base-pay and other perks offered in the private sector. They simply don’t have the funds. This not easily available to anyone in New Zealand yet beyond things like Employer contributions to KiwiSaver.

Are salary sacrificing and salary packaging the same thing?
No – sacrificing can be a subset of salary packaging.