If you work for an organisation that offers salary packaging, you can use some of your salary to pay for everyday expenses before income tax is calculated, meaning you pay less tax and have more money to spend. That’s because your salary packaging money is deducted first and then your tax is calculated on the remaining amount.
Salary packaging the maximum amount allowed each Fringe Benefits Tax (FBT) year means you’re making the most of this employee benefit. The maximum for employees of not-for-profit organisations is $15,900 (this is also known as your ‘tax free cap’) and $9,010 for hospital and healthcare employees. Salary packaging to the ‘cap’ means you’re using the maximum amount you’re allowed to salary package.
Salary packaging is an easy and convenient way to pay for regular expenses such as your mortgage or rent, credit card and personal loan payments, or even regular daily items such as groceries and petrol. There’s also lots of other benefits you can include in your salary packaging arrangement.
When you salary package for an entire Fringe Benefits Tax (FBT) year (1 April to 31 March) the maximum you can salary package is either $611.54 per fortnight or $305.77 per week. Salary packaging this amount means you are making the most of your benefit, but you can choose to salary package a lower amount if you prefer.
There are some instances where, even though you are salary packaging the maximum allowed, your salary packaging deductions can be above or below these amounts.
You don't have to nominate specific benefits, you can keep your salary packaging flexible with a Salary Packaging and Meal Entertainment card.
Your card also gives you access to thousands of dollars of deals and discounts on groceries, shopping, dining accommodation, even cinema tickets with the Everyday Savings program, helping your salary packaging funds go even further.
It doesn’t matter if you work full-time, part-time or casual, you may still be able to benefit from salary packaging. Due to the Government’s existing tax-free threshold, salary packaging won’t be beneficial to you if you earn less than $18,200. However, if your annual salary is more than the threshold amount and you pay tax, you should be able to benefit from choosing a salary packaging solution.
Yes, you can change your salary packaging allocation at any time once your account has been set up. Complete the changes to salary packaging form or call us on 1300 133 697 anytime you want to make a change.
Working for a rebatable employer means that you do pay FBT, but not the full amount. For the 2019 FBT year you will receive a rebate of 47% of the gross FBT payable (up to $30,000). This effectively means you will pay 53% of the gross FBT up to $30,000 and the full amount for anything over this.
Each pay cycle, your employer will deduct a nominated amount from your salary before tax is applied and then send that money to us. We then use this money to pay for the items you have selected, such as your mortgage, rent or daily expenses. It’s still your money and you can still spend it on the things you need, but it’s taken out of your pay before your tax is calculated. The remainder of your salary is then taxed and paid to you as normal. As your salary package amount is taken before tax is applied, you are left with more to spend each pay cycle.
EXAMPLE
The example below is based on a charity employee earning $50,000 and salary packaging $15,900 a year.
| Gross wages | $1,923 per fortnight | |
| Pre-tax | Salary packaging ($15,900/26) | – $611.54 |
| New gross (before tax) | $1,312 | |
| Less tax (Includes 2% Medicare levy) | – $142 | |
| Net wages | $1,169 | |
| Money deducted for salary packaging | + $611.54 | |
| Total pay | $1,781 per fortnight |
NOTE: Fees and charges have not been included in the above calculations.
See how much you can save by using our Salary Packaging Calculator.
You can access and check all your details including your transactions and latest balance information by logging in to your AccessPay account here.