How Does Salary Packaging Work?

Salary packaging tax savingsMore, for you

Normally when you receive your pay, tax has already been deducted. But with Salary Packaging, you can pay for some of your everyday expenses before you pay tax. These items could include your mortgage, rent, credit card bills, even your regular purchases such as shopping, groceries and fuel.

By using some of your pre-tax salary this way, you reduce the amount that is used to calculate your tax. It’s a great way to pay less tax, which means more for you. But there’s a limit to the amount of pre-tax salary you can contribute to Salary Packaging. If you go over this limit you will need to pay Fringe Benefits Tax. We manage your funds within this limit so you can make the most of your Salary Packaging.

We’re here to help

Once you decide on the item or items to Salary Package, we help you put everything in place, so that it’s easy and hassle-free for you. We let your employer know how much to take from your salary each pay and then when we receive your funds we use them to pay for the items you have selected. It’s as simple as that.

If you already know the items you want to include, we help you work out the maximum amount you can use from your pre-tax salary. Then simply provide us with the details of each item, so that we can pay for it on your behalf. This could be your mortgage, rent or even a regular payment such as a loan. We make sure that you’re within your limit and we manage your ongoing spend so you don’t become liable for Fringe Benefits Tax (FBT).

For some items, you have to pay first and then claim the money back, such as your credit card repayments because the amount varies each month. To use your pre-tax salary for these items, you let us know that you would like this included in your Salary Packaging. Then you make a claim and we use your pre-tax salary to pay this money back to you.

So, whether you’re asking us to pay someone on your behalf or to repay you, we can use your pre-tax salary to do this. This means you’re paying for the things you need and saving tax at the same time. Why wouldn’t you want more for you?

A Solutions Card gives more flexibility

RACV Solutions Card

If you’re not sure what items you want to package, or you don’t have any regular expenses, a Solutions Card is the perfect option. You don’t need to decide how you’re going to spend your money in advance.

Your pre-tax salary is deducted from each pay and added to your Solutions Card.

It’s then available for you to spend on everyday expenses such as groceries, petrol, bills and shopping as you need it. Find out more



Still not sure how it all works?

Liz works as a Manager at a charity, earning $50,000 a year. She chooses to Salary Package her full tax free limit to a Solutions Card so she has the flexibility to spend it on everyday items such as shopping, groceries, fuel, etc.

Savings with General Salary Packaging

*This example is for illustration only and should not be used to calculate your personal savings.  We always recommend you consult an independent financial adviser to determine whether Salary Packaging is right for your personal circumstances.

You could also add a Novated Lease

RACV Novated Lease

If you’d also like to save money on your next car, a Novated Lease can be added to your Salary Packaging arrangement. Even if you’re already using your Salary Packaging limit for other items, you can still save by adding a Novated Lease. Your vehicle finance and running costs are also taken from your pre-tax salary, and there’s no GST to pay on the price of a new car or most of the running costs, so the amount you save can add up to thousands of dollars.

We do everything for you

Setting up your Salary Packaging is easy. Just let us know the items you want to include and the amount you are happy to have deducted from your pre-tax salary. We’ll do everything else.

There are a wide range of items available for Salary Packaging, so why not check out the different benefits that can be included.

The items offered in a Salary Packaging scheme can vary by employer, so if you’d like to know more about the range of items available to you, contact your employer or call us now. 

Ready to get started?

Call us call us now on 1800 680 180