If you work for a hospital, PBI or health promotion charity
These employers are exempt from fringe benefits tax (FBT) up to a cap, so employees can arrange for their employer to pay personal expenses from pre-tax salary. The usual list includes:
- Rent and mortgage repayments
- Credit card and personal loan repayments
- Household bills such as electricity, gas, water and internet
- Groceries and everyday living costs
- School fees, childcare and tutoring
- Car loan repayments, fuel, registration and servicing
- Travel and holiday expenses
- Meal entertainment and holiday accommodation (separate cap)
If you work for any other employer
Private-sector employees can still package some items, but the list is narrower because there is no general FBT exemption:
- Extra super contributions (salary sacrifice into super)
- Novated leases on a car, including eligible electric vehicles
- A work-related laptop, tablet or phone, where the exemption conditions are met
- Work tools and equipment
- Professional memberships and work-related courses
- Income protection insurance
What cannot be packaged
Salary packaging only works for benefits your employer provides or pays for under an agreement made before you earn the income. You cannot back-date it, and some items such as most cash payments do not qualify. Your provider will give you a list of approved expenses, so check it before assuming something is eligible.
Is it worth it?
Packaging saves you your marginal tax rate (plus the 2% Medicare levy) on each dollar packaged, less any provider fee. Use the salary packaging calculator to see the numbers for your salary.