Toyota salary packaging: how it affects your gross pay, super and tax

What is Toyota salary packaging?

Toyota salary packaging is a type of salary sacrifice arrangement where you exchange part of your pre-tax salary for a Toyota vehicle (or related costs) through your employer. It is common in Australia under a novated lease, where a third-party financier leases the car and the lease payments are deducted from your gross pay. The arrangement can also cover running costs like fuel, insurance, and maintenance.

Salary packaging reduces your taxable income, which can lower the amount of income tax you pay. However, it also affects your superannuation guarantee and may trigger fringe benefits tax (FBT) depending on the vehicle's use.

How does salary packaging affect your gross pay?

Your gross pay is the total amount you earn before any deductions. When you enter a salary packaging agreement, your employer pays the packaged amount directly to the leasing company or benefit provider, reducing the cash salary you receive. For example, if your annual salary is $90,000 and you package $12,000 for a Toyota, your gross pay for tax purposes becomes $78,000. But your ordinary time earnings (OTE) for super may still be $90,000 if the packaged amount is not excluded under your award.

According to the Australian Bureau of Statistics (ABS) Average Weekly Earnings (May 2026), full-time adult ordinary-time earnings are $2,083.70 per week, annualised to $108,352 (index 100). Your indexed pay is your yearly gross ordinary-time earnings divided by $108,352, multiplied by 100. If your base salary is $90,000, your index is about 83.1. Salary packaging does not change this index unless the packaged amount is considered part of your ordinary-time earnings.

Superannuation and Toyota salary packaging

From 1 July 2026, the super guarantee is 12% of ordinary time earnings, up to a maximum contribution base of $270,830. The ATO defines OTE as what you earn for your ordinary hours of work, including commissions, shift loadings, and allowances, but generally excluding salary-sacrificed amounts. This means if you package part of your salary for a Toyota, your employer may calculate super on the reduced OTE, leading to lower super contributions.

For example, if your OTE is $90,000 and you package $12,000, your employer might only pay super on $78,000 (12% = $9,360 instead of $10,800). Some awards or enterprise agreements require super to be paid on pre-sacrifice earnings, so check your employment terms. The Fair Work Ombudsman sets award minima, but salary packaging is a separate agreement.

Tax implications of Toyota salary packaging

Salary packaging lowers your taxable income, which can reduce the tax you pay. Using the 2026–27 resident tax rates (excluding Medicare):

• Nil on the first $18,200
• 15% on income from $18,201 to $45,000
• 30% on income from $45,001 to $135,000
• 37% on income from $135,001 to $190,000
• 45% on income above $190,000 Plus a 2% Medicare levy.

If your taxable income drops from $90,000 to $78,000, your tax saving is roughly the difference in tax at the 30% marginal rate (about $3,600 less tax, plus Medicare). However, the packaged benefit may be subject to fringe benefits tax (FBT) if the car is available for private use. Many novated leases are structured to minimise FBT by using the statutory formula or operating cost method. The ATO provides guidance on FBT exemptions for certain vehicles.

Salary packaging and the national minimum wage

The national minimum wage from 1 July 2026 is $26.44 per hour, $1,004.90 per week, annualised $52,255 (index 48.2). If your base salary is at or near this level, salary packaging may not be viable because you need enough gross pay to cover the packaged amount and still meet minimum wage requirements. Modern awards set higher minimum rates; for example, the entry-level award floor is $25.74 per hour. Salary packaging cannot reduce your cash pay below the applicable minimum wage or award rate.

State and industry context

Your indexed pay also depends on where you work. According to the reference, state indices vary: New South Wales 101.2, Victoria 98, Queensland 97.9, South Australia 94.6, Western Australia 106.9, Tasmania 88.6, Northern Territory 95.2, Australian Capital Territory 109.9. If you work in WA, your earnings are likely higher relative to the national line, so salary packaging might have a different tax effect. Industry matters too: Retail trade index 75.9, Accommodation and food services 72.5, Professional services 114.7. A Toyota salary packaging arrangement is more common in industries where novated leases are offered as a benefit.

How to understand your own index

To find where your pay sits, calculate your annualised gross ordinary-time earnings (excluding salary-sacrificed amounts if they are not OTE) and divide by $108,352, then multiply by 100. For example, a base salary of $80,000 gives an index of 73.8. If you package $10,000, your taxable income falls to $70,000, but your index may still be 73.8 if the packaged amount is not counted as OTE. The Salary Index, pay guides, and how the index works can help you compare.

Important caveats

• No precise pay figure exists for “Toyota salary packaging” because it is a benefit structure, not a job role.
• The figures in this article are based on the on-site reference and general Australian rules from the ATO, Fair Work, and ABS. They are not personalised advice.
• Salary packaging can affect your eligibility for government benefits, HELP repayments, and the Medicare levy surcharge. Consult a tax professional.
• For more details on salary packaging rules, see the topics section or states for regional variations.

FAQs

Does Toyota salary packaging reduce my superannuation?

It can. Under Australian super law, salary-sacrificed amounts are generally not included in ordinary time earnings (OTE) for the super guarantee, unless the arrangement is specifically included in your award or agreement. From 1 July 2026, the super guarantee is 12% of OTE, up to a maximum contribution base of $270,830. If your Toyota salary packaging reduces your OTE, your employer's super contributions may be lower. Check your employment contract or consult the ATO.

How is Toyota salary packaging taxed?

Salary packaging reduces your gross taxable income because the packaged amount is taken from your pre-tax pay. For example, if you earn $100,000 and package $15,000 for a Toyota, your taxable income becomes $85,000. You then pay tax according to the 2026–27 resident rates: nil 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. However, the packaged benefit may be subject to fringe benefits tax (FBT) if the car is for private use, unless an exemption applies (e.g., a novated lease with a fully maintained vehicle).

Where does Toyota salary packaging sit on the Salary Index?

The Salary Index compares your annualised gross ordinary-time earnings to the national line of $108,352 (index 100). Because Toyota salary packaging is a way of structuring pay, not a pay level itself, your index depends on your base salary. For example, a base salary of $80,000 gives an index of about 73.8 (80,000 ÷ 108,352 × 100). If you package $15,000, your taxable income drops, but your gross ordinary-time earnings for index purposes may still be $80,000 if the packaged amount is not counted as OTE. The index is a benchmark for full-time adult ordinary-time earnings, not a measure of take-home pay.