Salary Packaging in Australia: Maximise Your Take-Home Pay
Salary packaging (salary sacrifice) allows you to give up part of your pre-tax salary in exchange for benefits (novated lease, extra super, etc.). This reduces taxable income, potentially saving tax. This calculator compares take-home pay with and without packaging using 2025-26 Stage 3 tax brackets.
FAQ
Q1: How does salary packaging reduce my tax?
When you package $X of benefits, your taxable income becomes salary - $X. You pay less income tax on the reduced amount. The benefit is worth $X to you but may cost your employer less due to payroll tax/GST savings. Win-win.
Q2: What can I include in a salary package?
Common items: Novated lease (vehicle), additional super contributions, portable electronic devices (laptop, tablet), work-related travel, school fees (some NFPs), childcare, health insurance. Some benefits are exempt fringe benefits (no FBT); others are taxable but still reduce taxable salary.
Q3: What is Fringe Benefits Tax (FBT)?
FBT is a tax your employer pays on certain benefits. For a novated lease, FBT may apply but packaging providers handle calculations and may use employee contributions to reduce FBT. The net benefit to you is still positive in most cases.
Q4: Is salary packaging worth it for everyone?
Most beneficial if you're in a higher tax bracket (30% or 45%). In the 19% bracket, benefits are smaller. Also consider your need for the packaged item. Packaging reduces cash salary, which may affect loan applications. Discuss with a financial adviser.