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Tax and Superanuation

The income tax rates from 1 July 2016 are:

Income Tax Rate*
0 - $18,200 Nil
$18,201 - $37,000 19%
$37,001 - $87,000 32.5%
$87,001 - $180,000 37%
$180,001 and over 47%

The tax you save from salary packaging depends on your income. For example, if you earn $50,000, you will save tax at 32.5% (your marginal tax rate).

* Add Medicare Levy and NDIS levy (2%)

To calculate your tax saving, go to calculators.

Superannuation

You may also salary sacrifice into your super fund. Some quick facts:

  • Super can be salary packaged 'on top of' your salary package limit;
  • Pre-tax super is taxed in the superannuation fund at 15%;
  • your pre tax super is generally 'locked away' until you retire;
  • The cap reduced to $25,000 from 1 July 2017 for all persons.
  • Your salary sacrifice superannuation contributions are now reported on your Payment Summary. The amount will be included in most government income tests; and
  • Salary sacrificed super is not eligible for the government co-contribution.

Superannuation can be a complex area. You are advised to seek financial advice.
If you wish to proceed, please contact your payroll.

Payment Summary - Reporting

Your salary packaging money is never taxed. It is NOT included in your 'salary and wage' figure on your Payment Summary. However, the value of your salary packaging is reported to the Tax Office. This figure is included in government income tested benefits or payments. For example, salary packaging will be included as 'income' for Centrelink, HELP, Child Support and Medicare Levy purposes. For a fact sheet, click here.

Salary packaging is shown on your Payment Summary and reported as a 'grossed-up' figure. The Tax Office always requires your 'gross income', whereas the salary package amount ($9,010 or $15,900) is like a 'net' or 'after-tax' amount. The grossed-up figure is calculatedusing a Tax Office formula:

Value of expenses paid or reimbursed x 1.9608. Therefore, the amount reported is normally:

  • For hospital, ambulance employee's, $17,667 ($9,010 x 1.9608); or
  • For all other employee's, $31,177 ($15,900 x 1.9608).

The amount shown on your Payment Summary is called the 'Reportable Fringe Benefits Amount' (RFB). You must copy this figure exactly as written into your Tax Return. (In 2014/15 this was at IT1).

If you are provided a 'company car', the value of this benefit is also reported. The figure is calculated by your employer and included in your RFB amount.

Please note, not all salary packaging benefits are reported. Non-reportable benefits include:

  • Remote area housing;
  • Benefits paid after 1 April (this will be reported next FBT year);
  • Benefits of less than $2,000 a year.

Superannuation is reported separately on the Payment Summary.

Since 1 April 2016, holiday accommodation (venue hire) and meal entertainment is reportable. A value will first appear on your 2016/2017 Payment Summary

Tax Return

You will need to lodge a tax return if your income exceeds the tax free threshold. From 1 July 2016, the tax free threshold is $18,200.

Your employment income is reported on your Payment Summary. Your income needs to be included in your tax return.

The 'impact' of salary packaging is best explained by way of an example.

For example, you work for Epworth HealthCare and earn $39,010. If you do NOT salary package, your Payment Summary will show:

  • salary and wages = $39,010, and this is the amount taxed (taxable income = $39,010).

If you then salary package $9,010 a year, your Payment Summary will look like:

  • salary and wages: $30,000
  • reportable fringe benefits: $17,667 ($9,010 x 1.9608)

Your taxable income is only $30,000 (previously $39,010). Your salary packaging is reported, but this is never subject to income tax. You will pay tax on only $30,000.

To calculate the benefit to you from salary packaging, use our Calculators. 2016/2017 FBT rates apply

Need Assistance?

If you need help, please contact us.