Salary packaging: what’s it all about?
Put simply, salary packaging is allocating a portion of your pre-tax salary to the payment of certain expenses, like your mortgage, rent, groceries or insurance, to reduce the amount of income tax you pay and increase your disposable income.
The amount you can save on tax will depend on your income, the benefits available to you and the types of expenses you choose to salary package. Your AccessPay consultant works with you to understand the salary packaging benefits available to you; how they work and how you can expect your disposable income to be affected.
When you’ve decided the benefits you want to package, we work with your employer to set these up so that on payday, it all works seamlessly.
Watch this short and informative video which explains salary packaging and provides some great examples of what you can save on everyday purchases.
What can you salary package?
Here are three main salary packaging benefits available to employees in the not-for-profit sector.
|General Living Expenses
Use up to $15,900 per year* of your pre-tax income for expenses you are already paying, including:
- Rent or mortgage payments
- Household utilities such as gas, electricity and water
- Car expenses including petrol and registration
- Health insurance premiums
Find out more about General Living Expenses.
Meal Entertainment Benefits is capped at $2,650 per FBT year and is in addition to General Living Expenses. Eligible expenses include:
- Meals and drinks consumed at a restaurant, cafe, tavern or hotel
- Taxi fares travelling to and from a restaurant, café, tavern or hotel
- External supplier costs paid by you for catering a private event
Find out more about Meal Entertainment here.
Enjoy your holiday, or a hire a function venue, tax-free! This benefit is combined with the Meal Entertainment Cap, and allows you to salary package:
- Holiday accommodation, including hotel or motel rooms, apartment or holiday house
- Car hire while on holidays
- Hire of a reception venue, private function room or marquee
Find out more about Holiday Accommodation here.
Did you know you can salary package a new car (also known as a novated lease) and save thousands more every year? Check out novated leasing here.
How much can you save?
General Living Expenses is the most popular salary packaging benefit for not-for-profit employees, so using this benefit, we’ve created the following example to demonstrate how the take home pay on a salary of $55,000 per year can be increased by $5,486*.
|Without salary packaging||With salary packaging|
|More money in your pocket||$ -||$5,486|
|Salary packaging to be paid to General Living Expenses||$ -||-$15,900|
|You pay tax on||$55,000||$39,100|
|Your net salary paid to bank||$44,478||$34,064|
|Salary packaged payments to living expenses||$ -||$15,900|
|Your disposable income||$44,478||$49,964|
Use our Salary Packaging Calculator to see how much you can save.
*Includes Medicare levy. Based on 2018/2019 tax rates.
Calculations are based on maximum expense items without GST and 2017-2018 income tax rates, and do not consider individual financial circumstances, such as Education Debt or other government benefits. Fees not included.
Employees from not-for-profit hospitals and ambulance services may only be eligible to salary packaging $9,010 per FBT year towards General Living Expenses.