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What is Salary Packaging & How Does it Work?Back


On November 07, 2022
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It may seem complicated at first, but really the answer to the question “what is salary packaging and how does it work?” is a simple one. We’ve put together a basic guide to help explain everything you need to know to get started – and why it is a fantastic way to restructure your salary.

 

What is salary packaging?

Salary packaging – also known as salary sacrificing – allows you to pay for everyday expenses using your pre-tax salary. In other words, you can allocate funds and put it towards some of your standard living costs before your tax is calculated. This lowers your taxable income and puts more money in your pocket.

How does it work? 

Salary packaging is an arrangement between you and your employer. Every pay cycle, your salary packaging funds are deducted to pay for everyday expenses; your tax is then calculated on the remaining amount. This is an ATO approved tax benefit that is afforded to those who work in public health, aged care, disability, charity, education, and government.

Eziway help facilitate this process, ensuring you are maximising your salary packaging opportunities and receiving the best possible outcome on your annual salary.

What can I salary package?

You can salary package a wide range of essential living costs such as mortgage, rent, personal loans, credit card repayments, school fees, childcare costs, portable devices, remote living costs, entertainment, hotel accommodation and venue hire. Utilising salary packaging benefits is a powerful tool for sticking to a budget and making your money work for you.

How does salary packaging work for not-for-profit employees?

Salary packaging is an excellent option for those working in the not-for-profit sector. Employees that are interested in salary packaging should reach out to their employer. From there, it is as simple as confirming your eligibility and making the appropriate arrangements with your salary packaging provider. That’s where we come in!

Is there a limit to how much I can salary package?

Yes, there are limitations on how much you can salary package. Eligible hospital and healthcare workers can package a maximum amount of $9,010 in capped living expenses each year, and employees in not-for-profit PBI organisations (Aged Care, Disability Services, Charities) can package up to $15,900.

What are entertainment benefits?  

Entertainment Benefits consist of meal entertainment, hotel accommodation and venue hire expenses that can be packaged above the standard cap and up to a maximum of $2,649 per FBT year (1 Apr–31 Mar).

How does salary packaging a car work?

One of the most common salary packaging options is car leasing – also known as novated leasing. Here, an employee allocates part of their pre-tax salary to pay for the running costs and finance repayments on their new or used vehicle. Novated leasing provides you with the ability to use your allocated funds to pay for fuel, tyres, registration, servicing, or any other costs associated with running a car.

Our novated leasing team will guide you through the process of making these budget allocations to best suit your lifestyle and get you behind the wheel – so it’s a win-win.

What is a salary packaging meal entertainment card?

A salary packaging meal and entertainment card will provide you with immediate access to your allocated funds. Consequently, you can pay for meals and accommodation using your pre-tax dollars. Salary packaging cards are simple to set up and offer more flexibility on how you spend your money.

Is it worth it?

Find out how much you can save using our Salary Packaging Calculator - your wallet will thank you later!

How do I get started?

If you’d like to get started or find out more, contact us here or call 1800 932 394.

Alternatively, more information can be found on our Help Centre.

 

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