1. What is Salary Packaging?

Salary packaging (also known as salary sacrifice) is an arrangement between an employer and employee where the employee agrees to receive part of their remuneration as benefits rather than as cash salary.

2. How Does Salary Packaging Work?

The salary packaging formula is:

Where:

• Gross Salary — The employee's total salary before packaging
• Tax Savings — The amount saved in income tax through packaging
• Benefits — The value of non-cash benefits received

Explanation: Salary packaging reduces taxable income while providing equivalent value through benefits.

3. Benefits of Salary Packaging

Details: Salary packaging can increase take-home pay by reducing taxable income, provide tax-effective benefits, and offer flexibility in remuneration.

4. Using the Calculator

Tips: Enter your gross salary, estimated tax savings from packaging, and value of benefits. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What items can be salary packaged?
A: Common items include cars, superannuation, laptops, phones, and other work-related expenses.

Q2: Are there limits to salary packaging?
A: Yes, there are FBT (Fringe Benefits Tax) limits and some benefits have specific caps.

Q3: Who can use salary packaging?
A: Availability depends on employer policies and local tax laws. Common in healthcare and non-profit sectors.

Q4: How does salary packaging affect superannuation?
A: Salary sacrificed super contributions are taxed at 15% rather than your marginal rate.

Q5: Are there reporting requirements?
A: Employers must report fringe benefits on payment summaries where applicable.