How does salary packaging work?
You may have heard people talking about salary packaging, but what is it? How does it work? And if you could pay less tax by doing it, why wouldn’t you?
Salary packaging – or salary sacrificing as it's often known – is an exciting story, but it can also seem complicated at first. At Maxxia, we’ve been helping Australians understand salary packaging for more than 30 years, so let’s see if we can simplify it.
Ordinarily, your employer takes out income tax from your pay and deposits the remainder into your bank account. You then pay all your living expenses – including your rent or mortgage, car repayments, insurances, groceries and utility bills – and if you’re lucky, have a bit left over.
But with a Maxxia salary packaging account, your employer still pays you the same salary, but we help you pay those same expenses before tax is taken out.
This means your taxable income could go down, your disposable income could go up, and with some of these expenses already taken care of, you could have more money for other essentials and surprises.
It’s no surprise that thousands of Australians currently enjoy the benefits of salary packaging with Maxxia.
Make everyday living expenses work for you
An example. Let’s say Susie earns $60,000. She works for a charitable organisation, and her employer provides a program which allows her to salary package a range of expenses (discover more information on what you could package in our “What can I package section” below) up to a cap of $15,900 each FBT year.
By packaging to her full cap of $15,900 she could enjoy tax savings up to $5,206* each FBT year.
This amount doesn’t include other salary packaging benefits she could be entitled to, including Meal Entertainment (up to $2,650 each year) and salary packaging a car through a novated lease.
Please note that Susie’s ability to salary package is dependent on the industry she works in and her employer’s policy. Contact us to discuss the amount you may be able to salary package given your individual circumstances.
If watching a video could help you pay less tax, why wouldn't you?
The types of benefits and the amount you can package depends on your employer and industry you work in. We’ve created some helpful videos covering all the benefits that could be available by industry.