While salary packaging is increasingly popular for reducing income tax, the full range of benefits extends far beyond household expenses like rent and mortgage payments. One of the most underappreciated yet highly beneficial aspects of salary packaging is the Meal Entertainment Card.
The team at GO Salary are dedicated to always providing their members with the best possible financial solutions, and this includes helping them explore options like the Meal Entertainment Card. Today, we’ll take a deep dive into exactly what they are, how they use it, and whether they really are worth it.
Firstly, What Is Salary Packaging?
Salary packaging is an arrangement between an employee and their employer to restructure income in a way that includes various pre-tax benefits, effectively lowering one’s taxable income. This not only helps to save on income tax but also allows for a more flexible and efficient use of your earnings, which you’ll receive as a package to spend separately on items like rent, car leases, phone bills, and more. A little while ago, we covered the basics in this article.
Salary sacrifice is a common term but typically relates to superannuation. Salary packaging is available to employees of certain not-for-profit organisations. The Australian Tax Office limits how much of your salary you can package; for charities, aged care, disability support, community services, and medical research organisations, the limit for general expenses is $15,900 each year. For public hospitals and ambulance services, the limit is $9,010.
While salary packaging is a great way to save money on your income tax, there are limits to what you can spend the salary packaged money on. That’s where the Meal Entertainment Card comes in.
What is the Meal Entertainment Card?
A Meal Entertainment Card is essentially a pre-loaded card that can be used to pay for dining and holiday accommodation expenses. It falls under the umbrella of salary packaging, with a portion of your pre-tax salary allocated to this card. This enables you to enjoy meals out while saving no tax.
The ATO allows employees of certain not-for-profit organisations to salary package up to $2,650 annually for meal entertainment and holiday accommodation expenses.
How to Use Your Meal Entertainment Card
Using your Meal Entertainment Card is straightforward. It functions basically like a debit card. First, you have to allocate funds, deciding the amount you’d like to allocate from your pre-tax salary to the card. You can decide this when adding your card through the GO Salary portal. After a short ID check, the card will be printed and sent to you.
After that, you’re ready to roll! The funds will come out from your pre-tax pay and be deposited to the card each week/fortnight/month (depending on your particular pay cycle). Once there is money on the card, you can use it just like you would any other payment card at eligible establishments where VISA is accepted.
Finally, be sure to stay informed about any spending caps or limitations associated with the card to maximise benefits. For quick answers to the most common questions, check out our cards info page, the fact sheet, or contact us.
Common Mistakes to Avoid When Using a Meal Entertainment Card
The first thing you want to avoid is overallocation; don’t allocate more than you’ll realistically spend, as, due to ATO restrictions, unused funds cannot be converted to cash or transferred to another account. Funds must be used by 31 March each year.
You’ll also want to make sure you’re using your card at the right venues. The card will work at businesses which provide dine-in meals or holiday accommodation. Think restaurants, cafes, hotels, bistros, etc.
Finally, be sure to stay informed about any spending caps or limitations with the card to maximise benefits. Saving tax is great, but the card needs to fit with your lifestyle and budget. If the card isn’t right for you, remember that you can make ad-hoc meal entertainment and holiday accommodation claims by submitting your invoices. You can read more on the fact sheet.
Get Started with GO Salary
Whether you’ve been looking for a way to make your dream holiday more affordable or just want to save some money on your regular family dinner at the local restaurant, the Meal Entertainment card could be the answer! Not yet salary packaging? Join now in minutes!
Frequently Asked Questions
How does a Meal Entertainment Card differ from a credit card?
Unlike a credit card, a Meal Entertainment Card is pre-loaded with funds from your pre-tax earnings and can only be used for specific dining and holiday accommodation expenses. It is a debit card with no credit limit attached.
Can anyone apply for a Meal Entertainment Card?
Meal Entertainment cards are available to employees who work for certain not-for-profit organisations that offer salary packaging benefits. If your employer salary packages with GO Salary, you can get started instantly online. If not, please consult your employer or GO Salary for details.
Are there any restrictions on a Meal Entertainment Card?
Yes, there are restrictions relating to the ATO legislation. For example, your Meal Entertainment Card cannot be used for takeaway, self-catering, or buying drinks only, such as a singular coffee. Cash cannot be taken off the card. You can read more about the restrictions in our fact sheet.