Financial Advice for Salary Packaging

According to the ASIC’s MoneySmart, salary packaging is “when you arrange to receive less income after tax, in return for your employer paying for benefits out of your pre-tax salary.” Essentially, this can reduce your taxable income and you may pay less income tax.

The benefits you can access through salary packaging are dependent on the industry and/or business type that employs you. Benefits can include (but are not limited to):

• a car, car loan, or other personal loans
• computer, software, or tools needed to perform your job
• super contributions
• other personal expenses or everyday expenses

Your employer may have to pay fringe benefits tax (FBT) on some of these benefits, as defined by the Australian Taxation Office (ATO).

You will need to arrange your salary package before you get paid (you can’t package your salary after you’ve earned it) and is usually effective for people on middle to high incomes. We recommend seeking professional advice to work out if salary packaging is right for you.

Who can offer salary packaging?

While salary packaging is more common in certain industries, technically, any employer can let their employees access these benefits. In industries like a not-for-profit (NFP), charities, public health, and private education, salary packaging can be more common as providers have access to a wider variety of benefits. For example, if you work at an NFP, you may be able to access additional benefits like payments towards school fees, mortgage payments, or utility bills.

Other business or employer types, including Government departments, agencies, and private or corporate companies, are still able to access plenty of advantages for total remuneration packaging.