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Thinking about salary packaging, but wondering if it's worth it for you?
Want to make your salary work smarter? Salary packaging could help you save on tax while paying for your everyday expenses.
But with different options available and varying eligibility rules, it can be hard to understand exactly how it could benefit you and if it’s worth the trouble.
The concept of salary sacrificing is simple: pay for certain expenses from your pre-tax salary and potentially reduce your overall tax.
While that might sound too good to be true, it's an ATO-approved way to structure your salary that could leave you better off each and every payday.
Sound good? Let's explore how salary packaging works, what you could package, and most importantly – whether it's worth it for your situation.
Think of salary packaging as a smarter way to pay for expenses you're already covering.
Rather than using your after-tax salary, these costs come out of your pre-tax pay, potentially reducing your taxable income and increasing your take-home amount.
When you salary package, your employer helps you restructure your salary to pay for approved expenses before tax is deducted. This arrangement needs to be set up in advance – you can't package salary you've already earned.
For example, if you earn $80,000 and package $15,000 in eligible expenses, you'll only be taxed on $65,000. The packaged amount goes directly toward your chosen benefits, like mortgage payments, or other approved expenses.
What you can salary package depends on your employer and industry. Healthcare and charity workers often have access to more extensive benefits, while corporate employees might focus on superannuation, novated leasing, and portable electronic devices.
See where you can potentially save on common salary packaging benefits, including:
Smart salary packaging could deliver real financial advantages you’ll notice in your pay packet, particularly if you're strategic about which benefits you choose.
The core purpose of salary packaging is simple:
The main benefit is reducing your taxable income while paying for expenses you'd have anyway. This could mean significant tax savings, especially for middle to high-income earners.
By lowering the amount of tax you pay, salary packaging could increase the amount of money that lands in your bank account each pay day.
Did you know that different industries have different packaging limits and options?
Some industries offer additional packaging options, including:
Find what benefits you could be missing out on by exploring our industry eligibility page.
While the benefits could be significant, it's important to make an informed decision based on your unique circumstances.
Consider your:
Salary packaging can affect:
Smart can help you understand your options and guide you through the salary packaging process.
This is general information only. Before entering any salary packaging or novated leasing arrangement, you should consider your objectives, financial situation and needs, and obtain appropriate legal, tax, financial, or other professional advice based upon your own particular circumstances. This information is current as of October 2025.
* Salary packaging benefits and caps vary by employer and industry. Eligibility criteria apply.
^ Some benefits may attract Fringe Benefits Tax (FBT). Your Smart packaging specialist can explain how this might affect your arrangement.