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WHAT IS SALARY PACKAGING? (SAL PAC) & SIMPLY HOW DOES IT WORK

Simply how does it work?

Salary Packaging is your Employer paying some money, from your weekly or fortnightly income, to a Salary Packaging Administrator, to pay for some personal expenses without this income being taxed.

The Administrator can pay the nominated personal expenses for you, or you can pay for the expenses up front and get reimbursed by the Administrator from the funds that your Employer has paid into your Salary Packaging Trust Account.

More Information

Sal Pac is a tax benefit scheme. A means for the Federal Government to address unintended disadvantages to some sectors with the introduction of the Fringe Benefit Tax (FBT) and a tool to inject financial incentives to government initiatives.

This means factors such as who you work for, how much income tax you pay and if you live in a remote area impact the benefits you are eligible for. Being tax law, there is rules, reports, terms and conditions.

This is where FAA help by lifting the burden and making it easy to increase the money you get to keep while protecting you and your employer.

What are the benefits of Salary Packaging?

You are able to pay less tax when you have your Employer pay for a range of everyday items or expenses using your pre-tax dollars such as your electricity bill, utility accounts, home mortgage or rental repayments and many more.

There are significant financial benefits when Salary Packaging, how much, depends on each person’s individual situation and who they are employed by.

How do I Get Started - Salary Packaging?
  • Click on the ‘Get Started’ button at the top of this page.
  • Then just follow the simple process to stop paying as much Tax as you are currently paying.
  • If your Employer currently isn’t Salary Packaging with us, click on the ‘Employers’ link and from this you can either have them sent an invitation to set themselves up as a Salary Packaging Employer.
  • Or, speak with your Employer and have them either go onto our website or contact us and we will assist them to answer any questions and get set up to allow you to Salary Package some personal items for you to stop paying so much tax.
Who can Salary Package?

Absolutely EVERYONE who is working here in Australia!

Depending on the type of Employer you work for, there are different levels of Tax Saving Benefits available.  There are only 4 different types/’FBT statuses of Employers when it comes to Salary Packaging and you will come under one of these types/statuses.

Below are the base tax savings benefits offered to every worker in Australia.

Your employer has a Full FBT status, what does that mean for you?

Everyone working in Australia can reduce the PAYG tax they pay by Salary Packaging the following.

Click to find out more.

Your employer must be NFP independent school or certain non-profit organisations including industry promotion organisations, trade unions and employer associations.

You have all the benefits of the Full FBT status previously noted as the base offering. In addition to this, you have the supplementary entitlements as described below.

Your employer has a FBT Rebatable status, what does that mean for you?

You have a $30,000 CAP which is the Grossed Up Taxable Value (GUVT) that equates to around a $15,900 reduction in your taxable income. The ATO facilitates Employers to reduce the amount of money that you would normally pay in PAYG Tax.

You can Salary Package items that would normally attract FBT, plus as many exempt benefits down to where you stop paying PAYG tax, or to a threshold set by your employer. This amount of money that your Employer is now not paying PAYG Tax on your income attracts FBT. But as a Relatable Employee, you get a Rebate (reduction) of 47% of the FBT payable.

FAA provides Employers and Employees with ALL available salary packaging options that are easy to use and comply with ATO requirements, making it easy for employers to support staff with Salary Packaging.

What can I package within my $30,000 Rebatable CAP?

There is no limit to the list of items you can package nor a requirement to have a list. Below is a typical list that Employers allow their Employees to package:

    • Home Loan & Rent – Home Loan repayments & residential rentals
    • Personal Loans – Personal, car or debt consolidation Loans
    • Aged Care – Aged and disabled care payments for parents, partners or dependants that need nursing care because of old age or physical or mental disability
    • Child Care – Child care costs
    • Computer items – Portable electronic devices, software, computers
    • Education – Professional memberships and subscriptions, newspapers, magazines, self-education, some educational courses, courses materials and related excursions
    • Financial Advice – Fees paid for financial advice (FBT Exempt)
    • Holidays – Accommodation, Flights, Transfers, Travel Insurance (Food excluded)
    • Insurance – House, Contents, Trauma, Life, Private health cover & Income protection
    • Memberships – Memberships to clubs and associations, including fitness centres
    • Private School Fees – Compulsory private school fees incurred for schools (excludes building levies)
    • Rates – Council, water & sewerage
    • Travel – Fares, accommodation, Public transport costs, parking fees
    • Utilities – Electricity, gas, telephone, body corporate, internet
    • Any Post-Tax component of Remote Area Benefits
    • Any Post-Tax component of Living Away From Home (LAFA) expenses; and
    • The ECM of Novated or Associated Leasing

The above is a non-exhaustive list of common benefits, the ATO allows you to package almost any legal item.

Meal & Entertainment, Venue Hire & Accommodation CAP

Additional to your CAP, the ATO offers a separate $5,000 CAP for Meal and Entertainment and/or Holiday Accommodation/Venue Hire Benefit.
Your employer may choose to offer access to one, both or neither. This separate CAP translates to $2650 of purchases.

FAA offer combined everyday living and meal entertainment benefits cards. This card identifies which benefit the transaction is and allocates the expense to the appropriate benefit. For tax compliance, funds for the two benefits are kept separate.

    Every Day Purchase Card (Benefit Card)

    Your employer may permit you to Salary Package everyday expenses via a dedicated prepaid, reloadable Visa or MasterCard specifically set up for purpose. These cards let you spend up to your CAP limit.

    The Everyday Purchase card can be used wherever Visa or MasterCard are accepted, including overseas and it can be used for such things as:

      • Groceries
      • Petrol
      • Electricity bills
      • Phone bills
      • Rates
      • Movie tickets
      • Subscriptions/Pay TV (e.g. Netflix, Foxtel, Stan etc)
      • Christmas Presents
      • Restaurant meals
      • Gift vouchers

    Cards do not allow cash withdrawals from ATMs, transfers to other accounts and transactions related to gambling and may have additional restrictions specified by your employer.

    Benefits of using a Benefit Card
      • The card acts as your ATO substantiation (No receipts needed)
      • Gives you the flexibility to use benefits on purchases you choose
      • Your account balance is real-time and prevents overspend
      • Accepted anywhere Visa or MasterCard is accepted (Except the Post Office)
      • Works with smart device wallets (eg Apple Pay, Google Pay or Samsung Pay)
      • You can apply for an additional cardholder (eg Spouse or partner)

    Working in a Not for Profit (NFP) Hospital.

    Working for an Ambulance service come under this FBT status of Employer plus there are many other anomalies.

    You have all the benefits of the Full FBT status previously noted as the base offering. In addition to this, you have the supplementary entitlements as described below.

    I have a $17,000 CAP, what does that mean?

    You have a $17,000 CAP which is the Grossed Up Taxable Value (GUVT) that equates to around a $9,000 reduction in your taxable income. The ATO facilitates Employers to reduce the amount of money that you would normally pay in PAYG Tax.

    You can Salary Package items that would normally attract FBT, plus as many exempt benefits down to where you stop paying PAYG tax, or to a threshold set by your employer.

    FAA provides Employers and Employees with ALL available salary packaging options that are easy to use and comply with ATO requirements, making it easy for employers to support staff with Salary Packaging.

    What can I package within my $17,000 Exemption CAP?

    There is no limit to the list of items you can package nor a requirement to have a list. Below is a typical list that Employers allow their Employees to package:

      • Home Loan & Rent – Home Loan repayments & residential rentals
      • Personal Loans – Personal, car or debt consolidation Loans
      • Aged Care – Aged and disabled care payments for parents, partners or dependants that need nursing care because of old age or physical or mental disability
      • Child Care – Child care costs
      • Computer items – Portable electronic devices, software, computers
      • Education – Professional memberships and subscriptions, newspapers, magazines, self-education, some educational courses, courses materials and related excursions
      • Financial Advice – Fees paid for financial advice (FBT Exempt)
      • Holidays – Accommodation, Flights, Transfers, Travel Insurance (Food excluded)
      • Insurance – House, Contents, Trauma, Life, Private health cover & Income protection
      • Memberships – Memberships to clubs and associations, including fitness centres
      • Private School Fees – Compulsory private school fees incurred for schools (excludes building levies)
      • Rates – Council, water & sewerage
      • Travel – Fares, accommodation, Public transport costs, parking fees
      • Utilities – Electricity, gas, telephone, body corporate, internet
      • Any Post-Tax component of Remote Area Benefits
      • Any Post-Tax component of Living Away From Home (LAFA) expenses; and
      • The ECM of Novated or Associated Leasing

    The above is a non-exhaustive list of common benefits, the ATO allows you to package almost any legal item.

    Meal & Entertainment, Venue Hire & Accommodation CAP

    Additional to your CAP, the ATO offers a separate $5,000 CAP for Meal and Entertainment and/or Holiday Accommodation/Venue Hire Benefit.

    Your employer may choose to offer access to one, both or neither. This separate CAP translates to $2650 of purchases.

    FAA offer combined everyday living and meal entertainment benefits cards. This card identifies which benefit the transaction is and allocates the expense to the appropriate benefit. For tax compliance, funds for the two benefits are kept separate.

      Every Day Purchase Card (Benefit Card)

      Your employer may permit you to Salary Package everyday expenses via a dedicated prepaid, reloadable Visa or MasterCard specifically set up for purpose. These cards let you spend up to your CAP limit.

      The Everyday Purchase card can be used wherever Visa or MasterCard are accepted, including overseas and it can be used for such things as:

        • Groceries
        • Petrol
        • Electricity bills
        • Phone bills
        • Rates
        • Movie tickets
        • Subscriptions/Pay TV (e.g. Netflix, Foxtel, Stan etc)
        • Christmas Presents
        • Restaurant meals
        • Gift vouchers

      Cards do not allow cash withdrawals from ATMs, transfers to other accounts and transactions related to gambling and may have additional restrictions specified by your employer.

      Benefits of using a Benefit Card
        • The card acts as your ATO substantiation (No receipts needed)
        • Gives you the flexibility to use benefits on purchases you choose
        • Your account balance is real-time and prevents overspend
        • Accepted anywhere Visa or MasterCard is accepted (Except the Post Office)
        • Works with smart device wallets (eg Apple Pay, Google Pay or Samsung Pay)
        • You can apply for an additional cardholder (eg Spouse or partner)

      Benefit Card considerations at FBT Yr end

      Any unspent balance remaining on the card at the end of the FBT year (31st March) simply rolls over to the next year.

      This will however, reduce the amount available to Salary Package in the next FBT year.

      Working for an approved Registered Charity, Registered public benevolent organisation and health promotion charities such as Red Cross and NFP Nursing Homes.

      Working for Legal Aid come under this FBT status of Employer plus there are many other anomalies.

      You have all the benefits of the Full FBT status previously noted the base offering. In addition to this, you have the supplementary entitlements as described below.

      I have a $30,000 CAP, what does that mean?

      You have a $30,000 CAP which is the Grossed Up Taxable Value (GUVT) that equates to around a $15,900 reduction in your taxable income. The ATO facilitates Employers to reduce the amount of money that you would normally pay in PAYG Tax.

      You can Salary Package items that would normally attract FBT, plus as many exempt benefits down to where you stop paying PAYG tax, or to a threshold set by your employer.

      FAA provides Employers and Employees with ALL available salary packaging options that are easy to use and comply with ATO requirements, making it easy for employers to support staff with Salary Packaging.

      What can I package within my $30,000 Exemption CAP?

      There is no limit to the list of items you can package nor a requirement to have a list. Below is a typical list that Employers allow their Employees to package:

        • Home Loan & Rent – Home Loan repayments & residential rentals
        • Personal Loans – Personal, car or debt consolidation Loans
        • Aged Care – Aged and disabled care payments for parents, partners or dependants that need nursing care because of old age or physical or mental disability
        • Child Care – Child care costs
        • Computer items – Portable electronic devices, software, computers
        • Education – Professional memberships and subscriptions, newspapers, magazines, self-education, some educational courses, courses materials and related excursions
        • Financial Advice – Fees paid for financial advice (FBT Exempt)
        • Holidays – Accommodation, Flights, Transfers, Travel Insurance (Food excluded)
        • Insurance – House, Contents, Trauma, Life, Private health cover & Income protection
        • Memberships – Memberships to clubs and associations, including fitness centres
        • Private School Fees – Compulsory private school fees incurred for schools (excludes building levies)
        • Rates – Council, water & sewerage
        • Travel – Fares, accommodation, Public transport costs, parking fees
        • Utilities – Electricity, gas, telephone, body corporate, internet
        • Any Post-Tax component of Remote Area Benefits
        • Any Post-Tax component of Living Away From Home (LAFA) expenses; and
        • The ECM of Novated or Associated Leasing

      The above is a non-exhaustive list of common benefits, the ATO allows you to package almost any legal item.

      Meal & Entertainment, Venue Hire & Accommodation CAP

      Additional to your CAP, the ATO offers a separate $5,000 CAP for Meal and Entertainment and/or Holiday Accommodation/Venue Hire Benefit.

      Your employer may choose to offer access to one, both or neither. This separate CAP translates to $2650 of purchases.

      FAA offer combined everyday living and meal entertainment benefits cards. This card identifies which benefit the transaction is and allocates the expense to the appropriate benefit. For tax compliance, funds for the two benefits are kept separate.

        Every Day Purchase Card (Benefit Card)

        Your employer may permit you to Salary Package everyday expenses via a dedicated prepaid, reloadable Visa or MasterCard specifically set up for purpose. These cards let you spend up to your CAP limit.

        The Everyday Purchase card can be used wherever Visa or MasterCard are accepted, including overseas and it can be used for such things as:

          • Groceries
          • Petrol
          • Electricity bills
          • Phone bills
          • Rates
          • Movie tickets
          • Subscriptions/Pay TV (e.g. Netflix, Foxtel, Stan etc)
          • Christmas Presents
          • Restaurant meals
          • Gift vouchers

        Cards do not allow cash withdrawals from ATMs, transfers to other accounts and transactions related to gambling and may have additional restrictions specified by your employer.

        Benefits of using a Benefit Card
          • The card acts as your ATO substantiation (No receipts needed)
          • Gives you the flexibility to use benefits on purchases you choose
          • Your account balance is real-time and prevents overspend
          • Accepted anywhere Visa or MasterCard is accepted (Except the Post Office)
          • Works with smart device wallets (eg Apple Pay, Google Pay or Samsung Pay)
          • You can apply for an additional cardholder (eg Spouse or partner)

        Benefit Card considerations at FBT Yr end

        Any unspent balance remaining on the card at the end of the FBT year (31st March) simply rolls over to the next year.

        This will however, reduce the amount available to Salary Package in the next FBT year.

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