Salary packaging allows employees to create a more flexible and valuable remuneration structure enabling them to improve their lifestyle by maximising disposable income. This can be achieved through direct income tax savings as well as potential indirect secondary advantages through changes in Government Benefit Payments and surcharges.

Advantages include:

Increased Disposable Income
Salary packaging allows you to exchange some of your taxable cash salary to pay for your day-to-day and lifestyle expenses (such as a home mortgage or motor vehicle) from your pre-tax salary. Only your remaining cash salary is subject to Income Tax, so your overall tax burden reduces.

While the Gross Salary paid by your employer remains the same, you pay less Income Tax, which leaves you with a greater net disposable income.

Greater Remuneration Flexibility
By offering salary packaging, your employer gives you greater flexibility and control to restructure your remuneration package based on your individual needs and circumstances. It incorporates your existing daily living expenses and allows them to be paid in a more tax effective way.

Potential Increased Eligibility for Government Benefit Payments
Salary Packaging may provide secondary indirect advantages where your assessable income reported on your annual Payment Summary (including any Reportable Fringe Benefits Amount) reduces to a level where taxes, levies or Government obligations are reduced (eg. HECS/HELP repayments, Medicare Surcharge) and/or where access to Government Benefit Payments may be achieved or increased (eg. Family Tax Benefits).

Investment for the Future
You can salary package additional superannuation contributions which are not subject to Income Tax or Fringe Benefits Tax (FBT). A superannuation contributions tax of 15% still applies, but the rate of tax is likely to be less than most people’s marginal Income Tax Rate. This allows you to build a larger nest egg for your future in a more tax-effective manner.