While not all Aussies can salary package, if you work in health, charity and certain corporate sectors, then you could be eligible. Only you and your co-workers are eligible to salary package, meaning you could pay less tax, leaving you with more money in your pocket.
Every single pay.
How does it work? Salary packaging is a tax-minimising arrangement available to eligible employees. It’s your chance to be more in control of your pay, making it go that little bit further by using your before-tax money to pay for regular expenses. This could reduce your taxable income and save you thousands in tax each year.
How much could you save in tax?
Everyone’s unique so your tax savings will depend on your salary and how much you choose to salary package. To give you a better idea, here’s how much three people in different sectors, each earning $60,000, could save per year.
Lucy works in Health
and earns $60,000 per annum
Disposable income Without Salary Packaging $41,002
Disposable income With Salary Packaging $43,798
Net benefit $2,796
She packaged
living expenses: $9,010 (cap)
*Estimate Only: Individual circumstances may vary
Mitch works in Charity
and earns $60,000 per annum
Disposable income Without Salary Packaging $34,112
Disposable income With Salary Packaging $38,969
Net benefit $4,857
He packaged
living expenses: $15,900 (cap)
*Estimate Only: Individual circumstances may vary
Aisha works in the Government sector
and earns $60,000 per annum
Disposable income Without Salary Packaging $47,012
Disposable income With Salary Packaging $47,885
Net benefit $873
She packaged
additional super contributions: $3000 (cap)
*Estimate Only: Individual circumstances may vary
Use our handy salary packaging calculator to see how much you could save!
Salary Packaging with a HECS-HELP Debt
It’s important to know that you could still potentially benefit from salary packaging even if you have a HELP (Higher Education Loan program) or HECS (Higher Education Contribution Scheme) debt.
There are some important points to be aware of:
It’s important to remember that salary packaging may affect your current taxable threshold, which could change the way the ATO calculates your repayments.
The Australian Taxation Office (ATO) assesses you on your ‘adjusted taxable income’ when working out how much you should pay in HELP or HECS repayments. So with an increased gross salary, you may need to increase your regular HELP or HECS repayments, otherwise you may end up with a bill at tax time.
If you choose to go ahead and salary package, you’ll need to ask your payroll department to deduct additional HECS-HELP repayments. How much? Maxxia has an online HECS-HELP calculator which will estimate the additional amounts you might need to request through your payroll, as well as your potential tax savings as a result of salary packaging.
You can crunch the numbers for yourself.
Wondering exactly what you can salary package?
*Salary Packaging:
Lucy: The estimated potential tax benefit is based on the assumption that an eligible employee with an annual salary of $60,000 salary packages to a $9,010 per annum limit. FBT rates effective 1 April 2024 and PAYG tax effective 1 July 2024 have been used and average Fees and Charges are included. The actual administration fee that applies to you may vary depending on your employer. Tax, benefit and Medicare Levy calculations are approximate, and assume no other taxable income in received. HELP repayments and taxation surcharges are excluded. This general information doesn’t take your personal circumstances into account.
Mitchell: The estimated potential tax benefit is based on the assumption that an eligible employee with an annual salary of $60,000 salary packages to a $15,900per annum limit. FBT rates effective 1 April 2024 and PAYG tax effective 1 July 2024 have been used and average Fees and Charges are included. The actual administration fee that applies to you may vary depending on your employer. Tax, benefit and Medicare Levy calculations are approximate, and assume no other taxable income in received. HELP repayments and taxation surcharges are excluded. This general information doesn’t take your personal circumstances into account.
Aisha: The estimated potential tax benefit is based on the assumption that an eligible employee with an annual salary of $60,000 salary packages to a $3,000 per annum.FBT rates effective 1 April 2024 and PAYG tax effective 1 July 2024 have been used and average Fees and Charges are included. The actual administration fee that applies to you may vary depending on your employer. Tax, benefit and Medicare Levy calculations are approximate, and assume no other taxable income in received. HELP repayments and taxation surcharges are excluded.
Additional superannuation contributions from pre-tax salary are subject to 15% contributions tax. The taxation of additional superannuation contributions via salary packaging may differ from the taxation of additional superannuation contributions from post-tax salary. Additional superannuation contributions will be reported on an employee’s annual payment summary and will be used to assess an employee’s eligibility for a number of government benefits, or liability for certain payments. Caps for concessional superannuation contributions apply – please refer to www.ato.gov.au for up to date information.