What is salary packaging?

 

Salary packaging is an Australian Tax Office (ATO) approved incentive that allows employees to increase their disposable income by paying for certain expenses from their pre-tax income, and at no cost to their employer.

The ATO determines the makeup of each salary packaging benefit and the employee groups entitled to receive them. In turn, organisations decide which benefits they’ll make available to their employees.

For employers, salary packaging is an is an extremely cost effective way to help attract and retain high-calibre staff, effectively helping to reduce the cost of recruitment, lowering staff turnover and increasing employee satisfaction.

For this reason, offering a meaningful and rewarding salary packaging program has become a core component of recruitment strategies for many organisations across Australia.

Popular salary packaging benefits offered by our clients

Smartgroup offers a full suite of benefits administered by our specialist teams, and provides organisations with the choice of award-winning outsourced services or software solutions that enable the management of salary packaging in-house.

Superannuation

Voluntary contributions into a super fund (on top of the superannuation guarantee amount paid by the employer).

Motor vehicles

Also known as novated leasing, salary packaging a car allows employees to save thousands, by  paying a significant portion of the finance and running costs using pre-tax dollars.

Portable electronic devices

Enables employees to make significant savings on the cost of renting or purchasing laptops, tablets and mobile phones used mostly (51%) for work.

Other ways employees can save with salary packaging

Education and information

Supporting their knowledge and professional development, these benefits allow employees to reduce the cost of industry memberships, news services and magazines, as well as self education.

House and family

Employees may be eligible to package expenses incurred in the line of work. Benefits include childcare, relocation expenses, remote area housing, living away from home allowance, and home office expenses.

Employee perks

Tax savings on certain items obtained for work, for example company products and services, or car parking.

 

Transport and travel

Employees may be eligible to salary package expenses incurred while travelling for work. This includes airline lounge membership, meal and accommodation expenses, taxis, and travel undertaken for training and education.

Tools and equipment

Tax savings on items employees purchase to assist with the performance of their duties, including mobile phones, tablets, briefcases, calculators, computer software, work related equipment, and the purchase and upkeep of uniforms.

Finance items

Personal financial expenses, including income protection insurance, interest on investment loans, deductible repairs to investment properties and financial and taxation advice.

Benefits exclusive to not-for-profit organisations

Also known as Public Benevolent Institutions (or PBIs), not-for-profit organisations such as research institutions, charities and public hospitals can offer staff these additional salary packaging benefits:

  • Meal entertainment
  • Living expenses
  • Loan and mortgage repayments
  • Rent
  • Credit card repayment and other bills.