What is Salary Packaging?

Salary Packaging allows an employer to pay a combination of cash wages and agreed non-cash benefits to their employees.

Some non-cash benefits are taxed at lower rates than cash wages, this is why employees can receive a financial gain from packaging non-cash benefits rather than paying for them personally out of after-tax salary.

The most common examples of non-cash benefits which are taxed at lower rates (or nil tax) are:

• Motor Vehicles
• Laptop computers, PDA’s & electronic diaries used for business use
• Superannuation contributions

Non-profit organisations can provide their employees with significantly greater benefits than their counterparts because of their concessional treatment of Fringe Benefits Tax (FBT).

 

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