Salary Packaging FAQs

How will my pay change if I Salary Package?

Each pay cycle your employer will deduct a nominated amount from your salary before tax is applied, and then send that money to us. We then use this money to pay for the items you have selected, such as your mortgage, rent or daily expenses. It’s still your money and you can still spend it on the things you need but it’s taken out of your pay before your tax is calculated. The remainder of your salary then gets taxed and paid to you as normal. As your salary package amount is taken before tax is applied, you are left with more to spend each pay cycle.

EXAMPLE

The example below is based on a charity employee earning $50,000 and salary packaging $15,900 a year.

Gross Wages $1,923.08 per fortnight
Pre-Tax Salary Packaging ($15,900/26) – $611.50
New Gross (Before tax) $1,311.58
Less Tax (Includes 2% Medicare Levy) – $142.43
Net Wages $1,169.15
Money deducted for Salary Packaging + $611.50
Total Pay $1,780.65 per fortnight

NOTE: Fees and charges have not been included in the above calculations.

See how much you can save by using our Salary Packaging Calculator.

What happens when I need to lodge my tax return?

When you receive your Payment Summary from your employer you will see a section titled ‘Reportable Fringe Benefits.’ This is the amount that you have salary packaged for the financial year and there is no tax payable on this amount.

The remainder of your salary appears in the Payment Summary as usual, but due to your taxable salary being reduced you will be taxed at a lower rate.

What if I have a HECS/HELP debt?

If you have a HECS/HELP debt, salary packaging is likely to increase your fortnightly HECS/HELP repayment whilst still making a considerable tax saving and increasing your take home pay.

EXAMPLE

The example below is based on two charity employees, one who does not salary package, and one who does. Dave works for a charity but does not salary package, his income is $50,000 per year. Dave’s annual salary is below the minimum HELP repayment threshold of $54,126 for the 2015-2016 financial year, therefore Dave does not make any HELP payments.

Dave’s Take Home Pay Calculation

Gross Wages $50,000 per year
Less Tax (Includes 2% Medicare Levy) $8,797
After-Tax Take Home Pay $41,203 per year
Fortnightly Take Home Pay ($41,203/26) $1,584.73 per fortnight

Rachel also works for a charity and earns a salary of $50,000 per year, but she chooses to salary package the full $15,900 per year limit. This decision takes her salary above the HELP repayment threshold so she has to make the compulsory payment.

Rachel’s Compulsory HELP Repayment Calculation with Salary Packaging

Gross Wages $50,000 per year
Pre-Tax Salary Packaging – $15,900
Taxable Income $34,100
Reportable FBT Amount (Grossed up amount – the amount you would need to earn before tax to get the same benefit) $31,176.72
Total HELP Repayment Income (Taxable Income + Reportable FBT Amount) $65,176.72
Compulsory HELP Repayment (4.5%) $2,932.95 per year

NOTE: Fees and charges have not been included in the above calculations.

Even though Rachel is paying her HELP debt, still saves money with Salary Packaging.

Rachel’s Take Home Pay Calculation with HELP Repayment and Salary Packaging

Gross Wages $50,000 per year
Pre-Tax Salary Packaging – $15,900
New Gross (Before Tax) $34,100
Less Tax (Includes 2% Medicare Levy) – $3,703
Compulsory HELP Repayment – $2,932.95
Money deducted for Salary Packaging + $15,900
Total Pay $43,364.05 per year
Fortnightly Pay ($43,364.05/26) $1,667.85 per fortnight

NOTE: Fees and charges have not been included in the above calculations.

As a result of her decision to salary package, Rachel repays $2,932.95 of her HELP debt each year and has additionally increased her take-home pay by $83.12 each fortnight ($2,082.05 per year) compared to Dave who does not salary package.

What if I don’t work full-time?

No matter if you work full-time, part-time or casual you can benefit from salary packaging. Due to the Government’s existing tax-free threshold, salary packaging won’t be beneficial to you if you earn less than $18,200. However if your annual salary is more than the threshold amount and you pay tax, you can benefit from choosing a salary packaging solution.

Is there a maximum amount that I can salary package?

Yes. The maximum amount you can contribute from your pre-tax salary (this is known as the FBT limit, cap or threshold) depends on the type of employer you work for. You will pay Fringe Benefits Tax on any amount over this limit. Visit our What Can I Salary Package page to see the current salary packaging limits for your industry.

I work in private education. My employer offers Salary Packaging but say they are classified as a ‘rebatable employer.’ What does this mean?

Rebatable Employers are certain non-government organisations that are not exempt from FBT but are instead eligible for a rebate of the amount of FBT that would otherwise be payable.

So will I benefit from Salary Packaging with my rebatable employer?

In most instances you will only benefit from Salary Packaging if you earn over $80,000 per year. However you do qualify for Novated Leasing which is when you pay for your vehicle, including running costs, from your pre-tax income.

See how much you can save by using our Novated Leasing Calculator.

Can I change my salary packaging allocations once it’s set up?

Yes, you can change your salary packaging allocation any time once your account has been set up. Call us on 1800 680 180.

How can I see my account details and transaction information?

You can access all your transaction and balance details by logging in to your account at https://www.racvsal.com.au

What remote area benefits are available?

If you live and work in a remote area you may be entitled to receive benefits that will reduce your taxable income, meaning you pay less tax on your salary.

Remote area housing expenses include:

  • Employer provided rental costs
  • 50% of your personal rental costs, with no Fringe Benefits Tax (FBT) incurred
  • Mortgage interest on a remote area property which will incur 50% Fringe Benefits Tax
  • Your electricity or gas expenses when you pay rent or a mortgage as a remote area benefit, incurring 50% Fringe Benefits Tax.
What is the fly-in fly-out benefit?

If you work in a remote area you may be entitled to receive benefits for transport and accommodation costs for travel between your home to your remote area workplace.

How do I qualify for the remote area or fly-in fly-out benefit?

You can claim for remote area benefits if you live and work in an area designated as remote, or you can claim for fly-in fly-out benefits if you work in a remote area that you must travel to from your home. To claim these benefits your employer must offer them as part of their workplace benefits. To find out if you qualify contact your employer.