Whether you call it ‘substantiation’, ‘documentation’, or simply ‘paperwork’, providing proof of salary packaged expenses (‘POE’) is super important, because it is a Tax Office requirement. In this article, we’ll briefly explain why it’s necessary, and how we make it easy for members to supply.
Proof is required for payments
The simplest and most important fact is that proof needs to be supplied in order to receive salary packaging payments. This is an ATO obligation. Sure, members can salary package expenses such as rent, car loans, mortgage repayments, school fees, credit card repayments, health insurance and more. But simply nominating the expenses is only part of the process – proof is needed to substantiate the payments.
We know that to claim a tax deduction at tax time, you need to have an invoice or a receipt. The same principle applies to salary packaging. You must provide proof of your expenses, otherwise you can’t salary package the expense. The exception is our salary packaging card (see later).
Reimbursement or direct payments?
Many expenses are paid by way of reimbursement. In other words, the member incurs and pays for the expense, and then supplies the proof to be reimbursed from their own pre-tax earnings. This is a simple and cash-flow positive way of managing a salary package. Even better, members can provide a whole stack of proof at once, so that the reimbursements continue pay-to-pay without an ongoing requirement to submit paperwork. Best of all, reimbursement payments are made to a member’s chosen bank account, normally the same as their pay.
Some members ask for payments to be made direct to an expense. This works a little differently. We process the salary packaging funds directly to the expense (e.g. mortgage or rent). Proof is still required to verify the payments and funds cannot be withdrawn.
Running out of proof!
It’s okay, GO Salary will always let members know when the proof is running low. It can also be viewed at any time via the GO Salary online platform (along with a full history of documents provided). So if someone is running low, they will know about it!
In the rare case where proof isn’t provided, we get to the point where the payments cannot be made. The funds are held on the member’s salary package and are released once the POE is updated. We don’t like holding anyone’s money, so we do ask for members to keep things up-to-date.
Providing proof of expenses
GO Salary has made it super easy to provide POE. Members can simply log in to the GO Salary portal and upload their documents. If using a smartphone, photos can be taken and uploaded. This is a secure process and is very fast. Alternatively, members can email or post in their POE. We will then upload it for them.
There will be information on the type of proof required. This is pretty easy – in most cases, it’s a statement from the expense which shows the payments. All proof is reviewed by the GO Salary team and we’ll let the member know if we need further information.
Salary Packaging Cards
Members using the salary packaging cards do not need to submit proof. The card operates in a different way and is designed for salary packaging purposes. So, members can have their money deposited to the card and can use it for purchases, without the need to supply POE.
Questions?
If you work at an organisation which doesn’t use GO Salary and would like to learn more about our innovative compliance processes, please get in touch. If you’re a GO Salary member and need assistance with your salary package, please contact us (or log in and send us a message through the secure inbox).