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Salary packaging (also referred to as "Salary Sacrifice" and "Flexible Remuneration Packaging") is a legal process whereby existing cash salary is remodelled by an employee into a combination of cash and non-cash benefits, in accordance with employer guidelines. The non-cash benefits are paid for from the employee’s pre-tax salary.
As a result, the income tax payable on the employee’s original pre-tax salary is replaced by a combination of income tax and fringe benefits tax (FBT). The level of FBT payable depends on the type and value of the benefit items being packaged (see What can I package at Clause 6). The tax outcome for each employee will vary depending on the employees particular circumstances.
Please click here for the documents you will require for salary packaging.