Salary Packaging Tips. Tax Savings & Super Strategies

Salary Packaging Tips. Tax Savings & Super Strategies

Unpacking Salary Packaging

Smart salary packaging can deliver tax savings and help you grow your super faster. But which benefits give you the most value, and how do you make your salary package work harder for you?

Salary packaging (or salary sacrifice) is an arrangement between you and your employer where you agree to receive part of your salary as benefits instead of cash. Because these benefits are provided before income tax is applied, you effectively reduce your taxable income and that can translate into tax savings.

Common packaged benefits include additional super contributions, novated car leases, and work-related items such as laptops or phones. However, not every benefit is treated equally under Australian tax law, so knowing which ones attract the best tax treatment is crucial.

Current Tax Saving Benefits for Salary Packaging

  • Increased superannuation contribution caps. The concessional (pre-tax) contribution limit rose from $27,500 to $30,000 from 1 July 2024. That’s more room to grow your retirement savings while lowering your taxable income.
  • Electric vehicle (EV) salary packaging remains FBT-free. Eligible EVs below the luxury car tax threshold continue to enjoy Fringe Benefits Tax (FBT) exemption.
  • Technology and work tools. Portable devices and work-related software are still eligible for nil-FBT (Fringe Benefit Tax) treatment when used primarily for work.
  • Public and not-for-profit sector advantages. Employees of hospitals, charities, and public benevolent institutions can package certain living expenses such as rent or mortgage payments up to specific capped limits. Eligibility will depend on the specific employer, your employment contract, and whether that employer is eligible for the FBT concessions.

Benefits At a Glance:

Benefit Type

Why it works

Risks/Limitations

Extra Super Contributions

Moves part of your salary from your marginal tax rate (up to 47%) to the 15% super contributions tax, boosting long-term savings.

Must stay within the $30,000 concessional cap. Excess contributions may attract penalty tax.

Novated Lease on an Electric Vehicle

Eligible EVs under the luxury car tax threshold may be exempt from FBT saving thousands each year.

Requires employer participation and specific vehicle eligibility.

Portable Devices & Work Tools

Laptops, phones, and tablets used primarily for work may be FBT-free, making them a tax-effective inclusion.

Must meet the “mainly for work” rule. Personal use may limit eligibility.

Living Expense Packaging (Not-for-Profit Employees)

Staff in eligible sectors can package mortgage, rent, or utility expenses up to capped limits without FBT

Only available to certain employers. Strict reporting and caps apply.

Smart Salary Packaging Strategies

  1. Start Early in the Financial Year
    Salary sacrifice arrangements must be in place before the income is earned. Starting early means you maximise your full-year benefit.
  2. Combine Super & Lifestyle Benefits
    Blend long-term strategies (like super contributions) with short-term perks (like EV leases or work devices) for a balanced approach.
  3. Know Your Caps and Thresholds
    Overstepping the concessional super limit or FBT-exempt caps can trigger extra tax. Review your total salary package regularly to stay compliant.
  4. Use Carry-Forward Super Rules
    If you didn’t use the full concessional cap in prior years and your super balance is under $500,000, you may be able to “catch up” unused amounts and make larger pre-tax contributions.
  5. Model the Numbers
    Run side-by-side comparisons of your salary with and without packaging. The difference can be surprising once you factor in tax savings and employer costs.
  6. Get Professional Advice
    Salary packaging can affect superannuation, HELP debt, and government benefits. A qualified accountant or financial planner can help tailor a package that fits your goals and avoids costly mistakes.

Salary packaging is a smart and accessible tax-saving strategies for Australian employees. With increased super caps, EV incentives, and technology benefits, there are opportunities to make your income work smarter.

At Cashflow Financial, we help clients design and manage salary packaging strategies that maximise take-home pay, grow super faster, and stay fully compliant with the latest ATO rules.

If you’d like to explore how to optimise your salary package, contact our team today.