How does salary packaging work?

Put simply, salary packaging allows you to increase your disposable income by reducing the tax you pay.

By choosing to salary package, you allocate a portion of your income to the payment of certain expenses before your income tax is calculated. The part of your income that you allocate to salary packaging can be used for the same everyday items you pay for today, such as your mortgage or rent, groceries and insurance, so you don't even have to change your spending habits.

Because you only pay tax on the remaining amount, you pay less tax and increase your take home pay.

 

Salary packaging annual limits

Salary packaging limits are set for a Fringe Benefits Tax (FBT) year.

The FBT year runs from 1 April to 31 March, and the amount you can salary package depends on the type of organisation you work for.  

An additional benefit in your first year is that if you start salary packaging part way through the FBT year, you can still package the full annual amount between then and 31 March (we call this maximising).

 

  • Not-for-profit organisations

    If you work for a charity or other not-for-profit organisation, you can salary package up to $15,900 each Fringe Benefit Tax (FBT) year for general living expenses.

    General living expenses covers many of the everyday expenses you would usually pay such as groceries, petrol, mortgage, rent or even school fees.

  • Healthcare and hospitals

    If you work for a public or private not-for-profit hospital, or are a healthcare or ambulance worker, you can salary package up to $9,010 each Fringe Benefit Tax (FBT) year for general living expenses.