Salary Packaging Explained
Smart benefits. Real impactSalary packaging, also known as salary sacrificing, is an easy and convenient way to pay for regular expenses and maximise your money. The expenses you can package depend on your employer and your industry, but some common options include:
- Novated Lease
- Superannuation
- Rent or Mortgage
- Meal and Expense Cards
What is salary packaging?
Salary packaging (also known as salary sacrificing) is an ATO-approved way to use your pre-tax income to pay for everyday expenses — helping you pay less tax and take home more pay.
It works by structuring your salary so that certain costs like your car, rent, mortgage interest, utilities, or even work-related expense, are paid before tax is deducted. This lowers your taxable income, potentially saving you thousands in tax every year.
Who can salary package?
Most Australian employees can benefit from salary packaging — but what you’re allowed to package (and how much you can save) often depends on the industry you work in and your employer’s policies.
Here’s a quick overview
Private Sector Employees
Includes: Most businesses not classified as not for profit or government
Benefits:
• Eligible to package novated leases, work-related devices, superannuation, and in some cases, remote area housing
Tip: Even without FBT exemptions, salary packaging can still deliver meaningful tax savings, especially with a novated lease.
Health & Not-for-Profit (NFP) Sector
Includes: Public hospitals, charities, aged care, disability services, and religious institutions
Benefits:
• Access to tax-free limits of up to $9,010 (hospital employees) or $15,900 (charity employees) each year
• Additional packaging of meal entertainment and holiday accommodation
• Can combine with novated leasing and remote area benefits (if eligible)
These employees typically enjoy the greatest tax savings under ATO rules.
Government & Education
Includes: Federal, state, and local government agencies, public universities, and schools
Benefits:
• Eligible for a wide range of pre- and post-tax benefits
• Commonly package novated leases, superannuation contributions, laptops, and remote area housing
• No capped tax-free limit, but still highly effective for reducing taxable income
Remote Area Workers (All Sectors)
If you live and work in a remote area, you may qualify for FBT-exempt remote area benefits, including:
• Rent or mortgage interest
• Utility bills
• Holiday transport
These benefits can be packaged on top of other entitlements and often deliver significant savings, regardless of your industry.
What benefits can you salary package?
Living expenses are available to salary package for eligible employees. These typically include employees of charities, not-for-profit organizations, public hospitals, and some private schools.
If you live and work in a designated remote area, you may be eligible for Remote Area Benefits through salary packaging with Easi. This means you could pay less tax on your housing and certain living expenses — putting more money in your pocket.
Drive your dream car while enjoying the financial benefit of paying with pre-tax dollars. This arrangement not only reduces your taxable income but also simplifies car ownership.
Keep up-to-date with the latest technologies, which classify as exempt benefits for your employer who wont have to pay FBT on them. Buy a new laptop, smartphone, and more using pre-tax dollars from your salary. You could save significantly and stay ahead in the tech game!
How it works
Salary packaging is an Australian Taxation Office (ATO) approved method of receiving your remuneration package in a combination of cash salary and non-cash benefits, such as cars, living expenses, professional membership fees, and extra superannuation. The benefit of reducing your taxable income is you may pay less income tax.
Anyone who is employed, and has approval, is able to salary package and potentially save thousands of dollars each year. Note that benefits differ between industries, sectors and businesses — such as a Meal & Entertainment Card (link) — and some benefits require an employer to pay fringe benefits tax (FBT).
The car you want for less
Novated Leasing - also known as salary sacrificing or salary packaging - a car is where you bundle together the finance and running costs of your car into one easy package which comes out of your salary each pay. The benefit to doing this is you save income tax on the running costs of your car which you will have to pay anyway. You also don’t pay tax on the purchase price of the car, saving you more money in the long-term.
A novated lease often saves more due to tax advantages and bundled costs, unlike a car loan paid with post-tax income, though it requires employer involvement. Request a comparison from your leasing specialist to see which works for you.
Yes, you need to be an employee paying income tax to unlock the benefits of novated leasing. If you work for any not-for-profit organizations, you can also be eligible.
You can take out a novated lease for a minimum of 12 months and maximum of 60 months.
Yes, you can take out as many as you can afford and save tax with a salary sacrifice on each car in your household.
Get the wheels in motion
Ready to jump in the seat of your new car? Let’s get this show on the road!