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The National Automotive Leasing and Salary Packaging Association (NALSPA) has reminded taxpayers of salary packaging arrangements that could help them reduce their tax bills.
Salary packaging can save taxpayers thousands, association says
04 July 2025
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7 minute read
As tax time approaches and cost-of-living pressures continue to bite, NALSPA reminded taxpayers that they could use salary packaging to save on their tax bills.
“Many Australian workers don’t realise they could potentially be significantly better off each year by reducing their taxable income through salary packaging, a modern remuneration award mechanism also known as salary sacrificing,” chief executive Rohan Martin said.
“Salary packaging lets you use pre-tax dollars for selected expenses, reducing your taxable income so you pay less tax and keep more of your hard-earned money.”
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Superannuation, rent and mortgage payments, childcare and school fees, laptops, a car, meals eaten out, and health insurance are among the things that could be included in a salary package, NALSPA said.
The ATO said that there were no restrictions on the types of benefits that could be included in a salary sacrifice arrangement, as long as the benefits replace what a worker would otherwise receive as salary.
For an effective salary sacrifice arrangement, the ATO said that workers should enter the arrangement before they perform the work, have an agreement between them and their employer, and have no access to the sacrificed salary.
The arrangement must not include wages, leave entitlements, bonuses or commissions accrued before the arrangement is entered. The ATO added that workers could not claim a tax deduction for an expense their employer paid as part of their salary package.
The Tax Office recommended that workers get financial advice before entering salary sacrificing arrangements.
Case studies explored by NALSPA indicated that workers could save thousands by entering a salary packaging arrangement.
For example, a health worker earning $60,000 per year before tax could save $2,796 on their tax bill if they salary packaged $9,010 of their living expenses such as mortgage repayments, utility bills and groceries.
Alternatively, a corporate worker earning $95,000 a year before tax, that salary sacrifices $10,000 on additional superannuation payments and a laptop, could pay $3,509 less on their tax bill per year.
NALSPA suggested that salary sacrificing measures could help workers out as cost-of-living pressures remain high.
“We recommend workers use this tax time to assess their financial goals and taxation position, speak with their employer or a salary packaging provider to understand what might be possible for them, and seek professional advice such as from an accountant or tax agent,” Martin said.
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