Salary Packaging in the Western Australian Government
Salary packaging is a way to structure your pay so that you receive some of your income as benefits rather than cash. For employees of the Western Australian government, this can mean a lower tax bill and more take-home pay, even though your gross salary stays the same. This page explains how salary packaging works, how it relates to the national full-time average, and what it means for your weekly and hourly pay.
What Is Salary Packaging?
Salary packaging (or salary sacrificing) is an agreement between you and your employer to exchange part of your before-tax salary for benefits. The packaged amount is deducted from your gross salary before income tax is calculated. This reduces your taxable income, so you pay less tax. The benefits themselves may still be subject to fringe benefits tax (FBT), but many items are exempt or have concessional treatment, especially in the public sector.
For WA government employees, salary packaging is typically governed by enterprise agreements or public sector policies. Common packaged items include:
- Novated car leases
- Additional superannuation contributions (above the compulsory super guarantee)
- Electronic devices (laptops, tablets, phones)
- Work-related expenses (e.g., professional memberships)
- In some cases, housing or mortgage payments for remote area employees
How Does It Affect Your Pay?
Your gross annual salary – the figure you negotiate and that appears on your contract – does not change when you salary package. However, your taxable income decreases. For example, if your gross salary is $115,825 (the Western Australian full-time average from the ABS Average Weekly Earnings, May 2026) and you package $15,000 worth of benefits, your taxable income becomes $100,825. At the 2026–27 tax rates (nil up to $18,200, then 15% to $45,000, 30% to $135,000, plus 2% Medicare levy), this could save you thousands in tax.
But remember: the national full-time average is about $108,352 per year. Your gross salary is what the Average line compares. Salary packaging is a separate strategy to improve net income, not a change to your gross pay.
Weekly and Hourly Perspectives
The site shows your salary as a year, a week, and an hour on a 38-hour week. For a WA government employee earning the state average of $115,825:
- Weekly: about $2,227 (115,825 ÷ 52)
- Hourly: about $58.62 (2,227 ÷ 38)
Compare these to the national averages: $2,083.70 per week and $54.83 per hour. The WA government average is higher than the national line. But if you salary package, your take-home pay per week may be higher than someone earning the same gross salary without packaging.
The Role of Tax
Salary packaging works because of the progressive tax system. By reducing your taxable income, you may stay in a lower tax bracket or reduce the amount taxed at the highest rate. For 2026–27, the tax brackets are:
- $0 – $18,200: nil
- $18,201 – $45,000: 15%
- $45,001 – $135,000: 30%
- $135,001 – $190,000: 37%
- $190,001+: 45%
Plus a 2% Medicare levy (with possible reductions for low incomes).
If your gross salary is above $135,000, packaging can be especially valuable because it reduces the portion taxed at 37% or 45%. For WA government employees, the state average of $115,825 sits in the 30% bracket, so packaging still saves 30 cents per dollar packaged (plus Medicare).
How It Compares to Other States
The Western Australia full-time average of about $115,825 is the second-highest among states, behind the ACT ($119,090). It is well above the national average of $108,352. This means WA government employees often have higher gross salaries, giving them more room to benefit from salary packaging.
However, salary packaging is not unique to WA. Many state and federal government employees across Australia can package. The key is that your gross salary – the figure used on the Average line – remains the same regardless of packaging.
Common Misunderstandings
Some people think salary packaging increases their gross salary. It does not. It changes the mix of cash and benefits. Your employer reports your gross salary to the ATO as usual. The packaged benefits may appear on your payment summary as reportable fringe benefits, but they do not affect your superannuation guarantee (which is based on your gross salary, not the packaged amount).
Another misunderstanding is that salary packaging is only for high-income earners. While the tax savings are larger at higher incomes, even employees on the national minimum wage ($52,255 per year from 1 July 2026) can package certain items like super contributions. But for WA government employees, the typical salary is well above the minimum.
Where to Get More Information
If you are a WA government employee interested in salary packaging, check your enterprise agreement or contact your HR department. The ATO provides guidelines on fringe benefits tax and salary packaging. For a broader view of how your gross salary compares, use the Place a salary on the line tool to see where you sit against the national full-time average.
Remember: the Average line is based on gross ordinary-time earnings before tax. Salary packaging is a way to manage your tax, not a change to that gross figure. Understanding both helps you make informed decisions about your pay.