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Salary Packaging Companies Australia: How They Affect Your Gross Pay, Super, and Tax
Learn how salary packaging companies Australia work, their impact on your gross pay, superannuation, and tax, and where your pay sits on the national index.
Salary packaging does not change your gross ordinary-time earnings index, but it can reduce your taxable income and affect super contributions.
What Are Salary Packaging Companies Australia?
Salary packaging companies Australia are firms that specialise in administering salary sacrifice arrangements for employees. Salary sacrifice, also known as salary packaging, is an agreement between you and your employer where you give up part of your pre-tax salary in exchange for benefits such as a car, laptop, or additional super contributions. These companies handle the paperwork, ensure compliance with the Australian Taxation Office (ATO), and manage the fringe benefits tax (FBT) implications.
In Australia, salary packaging is common in the non-profit, healthcare, education, and government sectors, but many private companies also offer it through providers. The key benefit is that you pay less tax on the sacrificed amount, increasing your take-home pay or allowing you to access benefits at a lower cost.
How Salary Packaging Affects Your Gross Pay and the Salary Index
The Salary Index measures full-time adult ordinary-time earnings, with a baseline of 100 set at $108,352 per year (as of May 2026). Your gross pay before any salary sacrifice determines your index figure. For example, if you earn $120,000 per year, your index is about 110.8. Salary packaging does not change this gross figure because the index uses ordinary-time earnings before any deductions or sacrifices.
However, salary packaging reduces your taxable income. If you sacrifice $15,000 for a car, your taxable income drops to $105,000, but your gross ordinary-time earnings remain $120,000. The index stays the same, but your tax liability decreases. This is why salary packaging is often described as a way to 'keep more of what you earn' without affecting your headline salary.
Impact on Superannuation
Your super guarantee is generally calculated on your ordinary-time earnings. If you salary sacrifice part of your pay, your employer may calculate the 12% super guarantee on the reduced amount, unless your award or agreement states otherwise. For example, if your salary is $100,000 and you sacrifice $10,000, your employer might pay super on $90,000, reducing your super contributions. However, many employers continue to pay super on the original salary to avoid disadvantaging employees.
You can also salary sacrifice additional super contributions directly. These are taxed at 15% within the concessional cap ($30,000 for 2026–27), which can be more tax-effective than paying your marginal rate. The ATO caps these contributions, so check your limit.
Tax Implications of Salary Packaging
Salary packaging reduces your assessable income, which can lower your marginal tax rate. For the 2026–27 year, resident tax rates are: 0% up to $18,200, 15% from $18,201 to $45,000, 30% from $45,001 to $135,000, 37% from $135,001 to $190,000, and 45% above $190,000. Plus a 2% Medicare levy. By reducing your taxable income, you may stay in a lower bracket or reduce the amount taxed at higher rates.
However, some benefits attract FBT, which the employer pays. For example, a car provided through a novated lease may incur FBT, but many employers pass this cost to you through a lower salary. Non-profit organisations often have FBT exemptions for certain benefits, making packaging more attractive.
Choosing a Salary Packaging Company
When selecting a salary packaging company Australia, consider their fees, the range of benefits they offer, and their integration with your employer's payroll. Major providers include companies like Maxxia, SmartSalary, and others, but we do not endorse specific firms. Your employer will usually have a preferred provider. Always read the product disclosure statement and understand the fees, which can include monthly administration fees or setup costs.
How Salary Packaging Fits with Awards and Agreements
Modern awards and enterprise agreements may set rules about salary packaging. For example, some awards require that salary sacrifice does not reduce the base rate of pay below the award minimum. The national minimum wage from 1 July 2026 is $26.44 per hour, or $1,004.90 per week (index 48.2). If you package part of your salary, your remaining cash pay must still meet award or minimum wage requirements. Check with your employer or the Fair Work Ombudsman for your specific award.
State and Industry Benchmarks
Your salary index varies by state and industry. For instance, the ACT has an index of 109.9 ($119,090 annualised), while Tasmania is 88.6 ($96,008). Mining has an index of 154.7, while retail trade is 75.9. Salary packaging can help you maximise your take-home pay regardless of your industry, but the benefits are often greater in higher-paying sectors where marginal tax rates are higher.
For more on how your pay compares, see our pay guides and state-by-state breakdown.
Summary
Salary packaging companies Australia provide a valuable service for employees looking to reduce tax and access benefits. While they do not change your gross ordinary-time earnings or your Salary Index figure, they can significantly affect your take-home pay and super. Always consider the tax implications, FBT, and your personal financial goals. For a deeper understanding of how the index works, visit how the index works.
Questions people ask
What are salary packaging companies Australia?
Salary packaging companies Australia are providers that help employers offer salary sacrifice arrangements to employees. They manage the administration of packaging benefits such as cars, electronic devices, or additional super contributions, ensuring compliance with ATO rules and FBT. These companies typically charge a fee to the employer or employee for their services.
How does salary packaging affect my superannuation?
Salary packaging can affect your super in two ways. First, if you sacrifice salary into super, those contributions are generally taxed at 15% instead of your marginal rate, up to the concessional cap. Second, your employer's super guarantee is calculated on your ordinary-time earnings, which may be reduced after salary sacrifice. However, the super guarantee must still be paid on your original salary unless an award or agreement says otherwise. Always check your employment terms.
Is salary packaging worth it for tax savings?
Salary packaging can reduce your taxable income, potentially lowering your tax bracket and saving you money. For example, packaging a car through a novated lease can reduce your tax while providing a vehicle. However, you must consider FBT, caps on certain benefits, and your personal circumstances. It is often most beneficial for higher-income earners or those in non-profit sectors with FBT exemptions. Consult a tax professional.