What is salary packaging and how do salary packaging companies work?

Salary packaging, also known as salary sacrificing, is an arrangement where an employee agrees to forgo part of their pre-tax salary in exchange for benefits such as a car (novated lease), superannuation contributions above the guarantee, or electronic devices. Salary packaging companies in Australia administer these arrangements, handling the paperwork, compliance with tax laws, and often providing a salary packaging card. The benefit is that the packaged amount is deducted from your gross salary before tax, reducing your taxable income and potentially lowering the tax you pay. However, some benefits, like novated leases, may have fringe benefits tax (FBT) implications that the company manages.

How do salary packaging companies charge for their services?

Salary packaging companies typically charge a monthly administration fee, which can range from $10 to $30 per month, plus establishment fees for new packages. Some may also charge for additional services like managing a novated lease or providing a salary packaging card. These fees are usually deducted from your pre-tax salary as part of the packaging arrangement, meaning they are also tax-effective. It is important to compare fees across providers, as they can affect the net benefit of salary packaging. Always ask for a full fee schedule before signing up.

Is salary packaging worth it compared to the national average salary?

Whether salary packaging is worth it depends on your individual circumstances, including your marginal tax rate and the type of benefits you choose. For someone earning the national full-time average of $108,352 per year (ABS Average Weekly Earnings, May 2026), packaging items like additional superannuation can be highly tax-effective because contributions are taxed at only 15% instead of your marginal rate (which could be 30% or 37% for that income). However, benefits like novated leases may incur FBT, which can reduce the savings. The all-employees median salary is $74,100 (ABS Employee earnings, August 2025), so many workers earn less than the average. For those on lower incomes, the tax savings are smaller, and the fees may outweigh the benefit. It is wise to use a salary packaging calculator or consult a financial adviser.

Salary Packaging Companies in Australia: How They Affect Your Take-Home Pay

Salary Packaging Companies in Australia

Salary packaging companies in Australia help employees structure their remuneration to include benefits that are paid from pre-tax income. This can reduce the amount of tax you pay and increase your take-home pay for the same gross salary. Understanding how these companies work and how your salary compares to national benchmarks is key to deciding if salary packaging is right for you.

How Salary Packaging Affects Your Pay

When you use a salary packaging company, you agree to sacrifice a portion of your salary in exchange for a benefit. Your employer pays the benefit provider directly, and the packaged amount is deducted from your gross pay before tax is calculated. This lowers your taxable income, which means you pay less income tax and Medicare levy. The result is that your net (after-tax) pay can be higher than if you had received the same gross salary without packaging.

For example, if you earn the national full-time average of $108,352 per year (ABS Average Weekly Earnings, May 2026), your weekly pay before tax is about $2,083.70. After tax and Medicare, your take-home pay is roughly $1,500 per week (depending on your tax offsets). If you salary package $10,000 per year into additional superannuation, your taxable income drops to $98,352, saving you about $3,000 in tax (at the 30% marginal rate). Your take-home pay increases by that amount, though the super contribution is locked away until retirement.

Comparing Your Salary to National Benchmarks

The national full-time adult ordinary-time average is $2,083.70 per week, or $108,352 per year. This is the line used by this site. The full-time median is about $90,532, meaning half of full-time workers earn less than that. The all-employees median (including part-time and casual) is about $74,100. These figures come from the ABS (Average Weekly Earnings, May 2026, and Employee Earnings, August 2025).

If you are considering salary packaging, it helps to know where your salary sits relative to these benchmarks. Higher earners benefit more from packaging because they are in higher tax brackets. The 2026–27 tax rates are: 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. The Medicare levy is 2% (with possible reductions for low-income earners).

Types of Salary Packaging Benefits

Common benefits offered by salary packaging companies in Australia include:

Novated leases for cars: The lease payments, running costs, and FBT are paid from pre-tax salary.
Additional superannuation contributions: These are taxed at 15% instead of your marginal rate, up to the concessional cap.
Electronic devices (laptops, tablets, phones): Often exempt from FBT if used primarily for work.
Salary packaging cards: A pre-loaded card for work-related expenses.

Each benefit has different tax treatment. For example, novated leases incur FBT, which the salary packaging company calculates and reports. The FBT can reduce the tax savings, so it is important to understand the net benefit.

State-by-State Differences

Your salary may also vary by state. The full-time average in New South Wales is about $109,658; Victoria $106,137; Queensland $106,064; South Australia $102,450; Western Australia $115,825; Tasmania $96,008; Northern Territory $103,173; and the Australian Capital Territory $119,090. These figures are from the ABS Average Weekly Earnings, May 2026. If you work in a state with a higher average, your potential tax savings from salary packaging may be larger because you are more likely to be in a higher tax bracket.

Minimum Wage and Award Workers

The national minimum wage from 1 July 2026 is $26.44 per hour, $1,004.90 per week, or about $52,255 per year on a 38-hour week (Fair Work). Award minimums rose by 4.75% from that date. Workers on the minimum wage or award rates may still be able to salary package certain benefits, such as additional super, but the tax savings are smaller because their marginal tax rate is lower (15% or nil). Some salary packaging companies cater specifically to not-for-profit and public sector employees, who may have access to higher caps on tax-exempt benefits.

Choosing a Salary Packaging Company

When selecting a salary packaging company in Australia, consider:

Fees: Monthly administration fees, establishment fees, and any transaction fees.
Services offered: Do they handle novated leases, super contributions, or just general packaging?
Compliance: Are they registered with the ATO and do they manage FBT correctly?
Customer support: Can they explain how packaging affects your take-home pay?

You can Place a salary on the line to see how your current pay compares to the national average and medians. For more detailed guidance, see our Guides on salary packaging and tax.

How the Figures Are Set

The national average used on this site is the ABS Average Weekly Earnings for May 2026, multiplied by 52 to get an annual figure. Medians come from the ABS Employee Earnings survey for August 2025. The minimum wage is set by Fair Work and updated each financial year. These are the official benchmarks for comparing your salary. For more information, see How the figures are set.

Summary

Salary packaging companies in Australia offer a way to reduce your taxable income and increase your net pay, especially if you earn above the national average. By understanding your salary in terms of year, week, and hour, and comparing it to the national full-time average of $108,352, you can make an informed decision about whether salary packaging is worthwhile. Always check the fees and tax implications before signing up.