Additional resources: Salary Packaging Queensland Health Guide
Many healthcare workers are sceptical about whether salary packaging leads to meaningful tax savings. It is reasonable to consider the effect of fees. Upfront and ongoing costs can significantly affect the overall benefits. The following information outlines the fees you may encounter to support informed decision-making.
Salary Packaging Fees Checklist
Use this checklist to understand fees, compare providers, and ask the right questions before you sign anything. Tick items off as you go, fill in the worksheet, then print or save your notes.
1) Common salary packaging fees to ask about
Tip: Ask for a fee schedule in writing and confirm whether fees come from pre-tax or post-tax income.
2) Questions to ask your employer or provider
3) Fee comparison worksheet
Fill in what each provider charges, then add notes (for example: “fee waived if packaging above $X”, “charged monthly”, “includes card”).
| Fee type | Provider A | Provider B | Notes |
|---|---|---|---|
| Administration fee | |||
| Setup fee | |||
| Card fees | |||
| Novated lease fees | |||
| Other fees |
Quick check: If two providers deliver similar tax outcomes, the lower ongoing admin fee often wins long-term.
Key takeaways
- Salary packaging allows certain benefits to be paid for with pre-tax income.
- Administration fees cover a salary packaging provider's account management services.
- Salary packaging providers may charge various other fees.
- Novated leases may come with their own fees.
- Salary sacrificing may contribute to administration fees.
- Consider these illustrative examples.
- FAA provides support and information regarding compliant salary packaging arrangements.
Salary packaging and income tax
How salary packaging works in Australia is a way for employees to use pre-tax income to pay for certain personal expenses. Salary packaging enables employees to use pre-tax income for certain personal expenses. Depending on individual circumstances and applicable tax regulations, this may reduce taxable income and result in lower income tax. Outcomes will vary according to your situation.
The potential advantages of salary packaging depend on your personal circumstances. For example, salary packaging may affect matters such as child support payments and certain government benefits. You may wish to consult a qualified financial adviser and a registered tax agent to determine whether salary packaging is appropriate for your circumstances.
Note: FAA provides general information and education. If you require personal financial advice, we can refer you to an authorised representative of Lifespan Financial Planning Pty Ltd (AFSL 229892).
Want a clearer way to compare salary packaging fees?
This practical checklist helps you understand common charges, ask the right questions, and compare providers before making a decision.
For a broader overview of how salary packaging works, eligible benefits, and caps, see our
General information only. Not personal financial, tax, or credit advice.
What are salary packaging administration fees?
Administration fees are ongoing charges that cover the management and maintenance of your salary packaging account by the provider.
What do administration fees pay for?
There is a range of services that administration fees apply to, depending on your provider and the specifics of your salary packaging arrangement. Some common services include:
Account setup and management
Setting up your account, accessible through an online portal.
Coordinating with your company’s payroll department to implement pre-tax deductions.
Ensuring that your salary packaging arrangement remains compliant with Australian Taxation Office (ATO) requirements and fringe benefits tax regulations.
Payment processing
Receiving funds and making payments to cover benefits included in your package.
Managing trust accounts to securely maintain employee funds.
Keeping track of payments and deductions for accurate reporting.
Reporting and recordkeeping
Issuing regular statements through an online portal so employees can track their benefits.
Producing annual fringe benefits tax reports and payment summaries for lodgement with the ATO.
Maintaining documentation for audits and satisfying tax compliance requirements.
Compliance
Ensuring salary packaging arrangements stay compliant with changes to tax rules and making adjustments as required.
Keeping all benefits in line with ATO expectations, such as FBT-exempt benefits like portable electronic devices.
Calculating FBT on behalf of employers.
Fee structure
The structure of administration fees is determined by the employer’s salary packaging policy. The fee may be a flat rate charged weekly or yearly. Alternatively, the fee may be calculated as a percentage of the packaged amount.
Fees are typically between $5 and $10 per fortnight, which equates to approximately $130 to $260 per year. These figures are estimates only. Please consult your salary packaging provider for information relevant to your circumstances. Fees are generally deducted from the employee’s pre-tax income.
Other possible fees
Setup fee
Some providers may charge a one-time fee to onboard an employee and establish their account. The fee will vary, but could be between $50 and $200.
Salary packaging card fees
Specialised cards can give employees immediate access to funds approved through their salary packaging agreement. These payment cards may have various fees, including:
International transaction fees. These are usually 2-3% of the cost of the transaction.
A flat monthly or annual fee may be charged for use of the card. This could work out to roughly $40 to $60 a year.
A replacement fee of $10 to $15 may apply if the card is lost or destroyed.
An employee may wish to report an unauthorised transaction made on their card. If the transaction is not found to be fraudulent, the employee may need to pay a disputed transaction fee of $10 to $30.
Motor vehicle novated lease
Novated leases are managed separately from salary packaging for living expenses and have their own associated costs. A novated lease arrangement will typically come with the following fees:
Establishment fee. The fee for setting up the lease usually falls between $400 and $800.
Administration fee. The ongoing management of the lease has a fee that may come to between $200 and $500 per year. This is often bundled with the lease payments.
Novated leases are a credit arrangement with tax implications. FAA Group can provide general information and credit assistance under its Australian Credit Licence (ACL 391024). For personal financial advice, we can refer you to an authorised representative of Lifespan Financial Planning Pty Ltd (AFSL 229892).
Disclaimer: FAA Group is authorised to provide credit assistance under its Australian Credit Licence (ACL 391024). FAA does not provide motor vehicle loans directly and may refer clients to external credit providers or brokers (for example, e‑cars). Any loan or lease contract is between you and the external credit provider, and their terms, fees and approval criteria will apply.
Salary sacrifice
Salary sacrificing allows an employee to make additional superannuation contributions from their pre-tax pay. Your eligibility for salary sacrificing may depend on your employment situation. Additional contributions may be taxed at 15% provided you remain compliant with Australian tax rules.
Salary sacrificing may result in higher administration fees. The fees will vary based on the provider’s agreement with the employer.
Disclaimer: This is general information. The fee amounts mentioned are estimates only and may be subject to GST. Speak with your salary packaging provider to understand the fees payable under your arrangement.
Do salary packaging fees outweigh the tax savings?
Let’s look at some examples to understand the potential effect of salary packaging.
Disclaimer: These are illustrative examples based on hypothetical scenarios. They do not constitute personalised advice or guaranteed outcomes. A qualified financial adviser and a registered tax agent can help you understand how salary packaging may affect your personal circumstances.
Registered Nurse ($85,000 salary)
Estimated annual salary packaging: $9,010.
Estimated tax saving: $2703.
Estimated administration fees: $250 per year.
Potential difference after fees: $2453 per year ($204/month).
In this illustrative example, the estimated tax savings are $10.81 for every $1 paid in fees. Actual outcomes will depend on your income and tax position.
Senior Medical Officer ($180,000 salary)
Estimated annual salary packaging: $9,010.
Estimated tax saving: $3334.
Estimated administration fees: $250 per year.
Potential difference after fees: $3084 per year ($257/month).
In this illustrative example, estimated tax savings exceed the fees by $13.33 for every $1 in fees. Actual outcomes depend on your income and tax position.
Allied Health Professional with novated lease ($95,000 salary)
Estimated annual salary packaging: $24,010 (living expenses + novated lease).
Estimated tax saving: $7203.
Estimated administration fees: $250 per year.
Estimated novated lease management: $500 per year.
Estimated total fees: $750.
Potential difference after fees: $6453 per year ($537.75/month).
In this illustrative example, estimated tax savings exceed the fees by $9.60 for every $1 in fees. Actual outcomes depend on your income and tax position.
Working with FAA for salary packaging support
Clients who use our salary packaging service have access to a range of support options, including:
Transparent pricing with no hidden fees.
Full compliance management and reporting procedures.
24/7 access to our online portal for ease of use.
Access to the FAA app to manage claims.
Automated alerts and cap monitoring.
Assistance with tax and payroll queries.
No manual tracking required.
FAA is authorised to provide credit assistance under its Australian Credit Licence (ACL 391024). We may also provide general information on salary packaging.
From our clients
Disclaimer: This feedback reflects the personal opinion of the client and may not represent the experience of all clients. Future outcomes are not guaranteed.
Great experience with Salpac, extremely helpful and knowledgable team. Always at hand to answer any questions and to explain the process and what salary packaging involves.
- Jessica
Conclusion
Salary packaging may enable eligible employees to access pre-tax income, depending on their personal circumstances and employment situation. It is important to consider associated costs before entering into any financial arrangement. Fees may vary depending on your employer and the provider you use. Understanding the fees involved can assist you in making an informed decision.
Contact us for transparent pricing with all fees clearly disclosed and information about salary packaging to support you in understanding your options. Initial consultations will not include personalised advice. Tailored advice is only provided by an authorised representative of Lifespan Financial Planning Pty Ltd (AFSL 229892).
