5 Ways Salary Packaging Can Save You Money (2025)
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CashPal TeamLast updated 21 July 2025
5 ways salary packaging saves you money
Salary packaging lets you sort out day-to-day costs before the tax office touches your pay — your employer puts part of your gross wage toward approved expenses such as extra super, a novated car lease, or a personal loan repayment. Because that money leaves your pay packet first, the rest counts as your taxable income, so you pay less tax and see more in your account each payday.
How salary sacrifice works
Your employer covers certain costs straight from your gross pay before tax is taken out. Because that money leaves first, your taxable income drops and you hand over less to the tax office — a structure the government encourages because it nudges workers toward goals it sees as important, like building super and paying for training. Most employees can access some form of salary packaging, though the options vary between industries — public sector, healthcare and charity employees typically enjoy the most comprehensive packages.
1. Reduce your income tax liability
Salary packaging directly reduces your taxable income — package $10,000 of expenses and you lower your taxable salary by the same amount, paying less income tax overall. Strategic packaging can even move you into a lower tax bracket: earn $91,000 and you pay 32.5% tax on income above $90,000, but package $2,000 and you drop entirely into the 30% bracket.
Estimate your saving by multiplying the packaged amount by your marginal tax rate — on an $80,000 salary, packaging $5,000 cuts roughly $1,650 from your annual tax bill. When packaging several benefits, the calculations get complicated, so speak with a registered tax agent to maximise your return.
2. Boost your superannuation contributions
Ask payroll to send a slice of your pre-tax pay straight into your super, where it’s taxed at 15% instead of your marginal rate — more of each dollar stays invested and keeps working for you. For 2024–25 the concessional cap is $30,000, covering both employer contributions and anything you salary sacrifice. If you’re 50+ with less than $500,000 in super, you can carry forward unused cap room from earlier years.
Extra contributions compound faster than expected — putting in an extra $5,000 every year for 20 years could add more than $200,000 to your retirement pool, and you benefit from day one because the contribution tax is 15%, not your usual 32.5%+ income tax rate.
3. Maximise car savings through novated leasing
Novated leasing bundles your car purchase and running costs into a single pre-tax payment — a three-way agreement between you, your employer, and a finance company. It eliminates GST on both the car purchase and ongoing expenses: for a $50,000 vehicle, the GST saving alone is roughly $4,545, plus you avoid GST on fuel, servicing, insurance and registration.
A novated lease can cut about 15–25% off the total cost of car ownership compared with buying outright, combining GST savings, reduced income tax, and fleet pricing private buyers rarely see. Just allow for any fringe benefits tax that might apply, and have a plan for what happens when the lease wraps up.
4. Access tax-effective everyday expenses
Many employers allow packaging of routine living expenses up to specific annual limits. Different sectors offer varying opportunities:
Healthcare workers
Can often package meal costs, accommodation, and professional development expenses.
Charity employees
Typically access the most generous arrangements, including rent and mortgage payments. Working for a public hospital, charity or religious body lets you package up to $15,900 a year with no FBT at all.
Corporate employees
Might package laptops, mobile phones, and professional memberships — not every benefit attracts Fringe Benefits Tax.
5. Improve financial planning and cash flow
Salary packaging builds a money routine — the set-and-forget structure encourages steady saving and simplifies day-to-day planning. Your employer deducts the money before payday, so you pay yourself first; because the cash never hits your account, you’re less tempted to spend what was meant for super or car repayments. Big costs leave your salary upfront, making the rest of your budget clear — you can see exactly how much is left for rent, groceries and the occasional night out.
Advanced strategies and important considerations
Experienced users often combine several arrangements simultaneously — extra super contributions alongside a novated lease and professional development expenses — though FBT caps and contribution limits require careful planning. Kick off salary packaging at the start of the financial year to collect a full year of savings; joining midway can complicate FBT numbers because of pro-rata limits.
Salary packaging isn’t available to every worker — your employer must run a scheme, and the benefits menu differs by industry. FBT applies to many packaged benefits at 47% of the benefit’s value, which can eliminate packaging advantages unless you work for an FBT-exempt employer or stay within exempt thresholds. Because packaging lowers your taxable income, it can also change how Centrelink and other agencies assess benefits like child support or study allowances — check the rules before you commit.
Managing cash flow during transition
Salary packaging arrangements often take several pay cycles to implement fully, which can create temporary cash flow challenges while you maintain existing expenses and set up new systems. CashPal understands Australians sometimes need flexible lending during financial transitions — whether covering upfront costs for a novated lease or managing cash flow while new arrangements take effect, we offer straightforward applications and fast approvals to bridge these periods.
Frequently asked questions
Can I modify my salary packaging arrangements?+
Most arrangements allow annual reviews and modifications. However, some benefits like novated leases involve multi-year commitments that limit flexibility.
What happens when changing employers?+
Salary packaging arrangements typically end when you leave your job. Novated leases can sometimes transfer to new employers, but this requires their agreement.
How does salary packaging affect mortgage applications?+
Lenders consider your pre-packaging gross salary when assessing borrowing capacity, though some banks may reduce their assessment based on packaged amounts — discuss this with mortgage brokers early.
Next steps
- 1
Talk to HR
Discuss options with your employer’s human resources team — they can outline specific benefits available in your organisation.
- 2
Research providers
Your employer may have preferred approved packaging suppliers with established processes.
- 3
Calculate savings
Use online calculators to estimate your tax benefits.
- 4
Seek advice
Financial advisers can help optimise your overall strategy.
- 5
Plan your timing
Starting arrangements at the right time in the financial year maximises annual benefits.
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