Every organisation that offers salary packaging faces the same early decision: do you hand the whole thing to a specialist provider, or keep it in house and run it yourself? Both can work well. The right answer depends on your size, your team and how much control you want. Here is a clear comparison to help you choose, from a partner that can support you either way.
Option one: outsource to a specialist provider
With the outsourced model, a specialist provider runs your salary packaging program for you. They handle the tax expertise, the compliance, the FBT reporting, the employee enquiries and the day to day administration. Your payroll team simply processes the agreed deductions, and the provider takes care of everything else behind the scenes.
This suits organisations that want packaging off their plate entirely, that do not have the internal capacity to manage a compliant program, or that would rather their people focused on their core work. It is the lowest effort path for your team, and the compliance risk sits with the specialist.
Option two: keep it in house with software
With the in house model, you run the program yourself using purpose built salary packaging software. The platform handles payroll integration, applies the FBT caps correctly, and provides the compliance reporting and audit trails, so you keep control without taking on the manual burden or the tax risk.
This suits larger employers that want to keep the employee relationship close, retain full control and visibility, and keep their data in house, but who still want provider grade compliance built into the tools they use. It trades a little more internal ownership for a lot more control.
How to choose between them
A few questions usually make the decision clear:
- How much internal capacity do you have? Larger organisations with capable payroll teams often lean in house; smaller teams usually prefer to outsource.
- How much control do you want? If keeping the employee relationship and your data in house matters, software may suit you better.
- Where do you want the compliance effort to sit? Both models deliver compliance, but outsourcing shifts the day to day responsibility to the provider.
- What is your appetite for administration? Outsourcing is the lightest load on your team; in house gives you the most ownership.
A closer look at the costs
Cost sits on both sides of this decision, just in different forms. Outsourcing carries a service fee, but it removes the internal effort, the compliance risk and the need for specialist knowledge on your team. Running it in house with software carries a licence cost, but keeps more of the process, the data and the employee relationship under your control. The right answer depends on how you value effort, control and risk, not just the invoice.
A useful way to frame it is total cost, not just price. A cheap option that consumes your payroll team’s time or exposes you to a compliance error is not really cheap. Whichever way you lean, make sure you are comparing the whole picture rather than a single number.
What both models share
Whichever path you choose, the fundamentals should be the same. Your people get a compliant, well run salary packaging program, their pay is handled accurately, and the organisation stays on the right side of the tax rules. The choice of model changes who does the work and where the control sits, not whether the program is done properly. That is why this decision is about fit rather than quality.
You are not locked in
One of the most reassuring things about this decision is that it is not permanent. Organisations grow and change, and the model that suits you today may not be the one that suits you in three years. Starting outsourced and bringing the program in house later, or starting in house and handing it back to a provider, are both normal moves. Choosing a partner that offers both means you can change models without changing vendors, and without starting from scratch.
Common questions
Which model is more compliant?
Both can be fully compliant. The difference is where the effort sits. Outsourcing shifts the day to day compliance responsibility to the provider, while in house software builds the compliance rules into the tools your team uses.
Can we switch models later?
Yes. With a partner that offers both, you can move between outsourced and in house as your needs change, and they manage the transition so your people are not disrupted.
How do we decide which model to choose?
Start with three questions: how much capacity your payroll team has, how much control over the program and the data you want, and where you would rather the day to day administrative effort sit. Your answers usually point clearly to one model. If they do not, a partner that offers both can talk you through it honestly rather than steering you toward the option that suits them.
You do not have to choose alone
The good news is that you are not locked into one path or forced to work it out on your own. Eziway offers both models. We can run your salary packaging as your outsourced provider, or give you the software to run it in house, with the same compliance expertise underpinning either choice. That means the decision is about what fits your organisation, not about which vendor you are stuck with.
If you are weighing up the two approaches, we are happy to talk it through honestly and point you to the model that genuinely suits you, even if that changes over time. Get in touch and we will help you decide.
Disclaimer
- This article is general information only and does not take your personal or organisational circumstances into account. It is not financial, taxation or legal advice.
- Salary packaging and novated lease rules, caps and Fringe Benefits Tax treatment depend on your situation and current legislation, and can change.
- Please speak with Eziway and seek independent advice before making a decision.