Salary packaging

Short description: Australian term for manipulation of employee benefits

Personal finance

Credit · Debt

* Mortgage
* Car loan
* Charge card
* Credit card
* Unsecured personal loan
* Rent-to-own
* Student loan
* Pawn
* Title loan
* Payday loan
* Refund anticipation loan
* Refinancing
* Debt consolidation
* Bankruptcy

Employment contract

* Salary
* Wage
* Salary packaging
* Employee stock ownership
* Employee benefits

Retirement

* Pension

*     * Defined benefit
* Defined contribution
* Social security

Personal budget and investment

* Financial planner
* Financial adviser
* Stockbroker
* Financial independence
* Estate planning
* Target date fund

See also

* Bank
* Cooperative
* Credit union

* v
* t
* e

Salary packaging (also known as salary sacrifice or salary exchange) is the inclusion of employee benefits (also called fringe benefits) in an employee remuneration package in exchange for giving up part of monetary salary. Such arrangements are entered into most commonly if there are tax or other benefits to be derived by the employer or employee from the arrangement.[1]

## Contents

* 1 Salary sacrifice in the United Kingdom
* 2 Salary packaging in Australia
* 3 See also
* 4 References

## Salary sacrifice in the United Kingdom

In the United Kingdom, HM Revenue and Customs (HMRC) describes salary sacrifice as an arrangement where an employee gives up the right to part of their contractual cash pay in return for a non-cash benefit provided by the employer, achieved by varying the employment contract.[2][3] HMRC guidance states that if the contract is not effectively varied, or if an employee can readily revert to the previous higher cash salary, the arrangement may be treated as ordinary cash remuneration for tax purposes rather than a genuine sacrifice.[3][4]

Salary sacrifice arrangements have commonly been used for benefits such as employer pension contributions, employer-supported childcare and cycle-to-work schemes.[5][6] GOV.UK guidance for employers states that a salary sacrifice arrangement must not reduce an employee's cash earnings below the relevant National Minimum Wage rate.[7][6]

From 6 April 2017, most benefits provided through salary sacrifice and other optional remuneration arrangements are taxed on the higher of the amount of cash pay given up and the benefit's value under the normal benefit in kind rules, which largely withdraws the income tax and National Insurance contributions advantages for affected benefits.[8][7]

HMRC guidance notes limited exclusions, including employer payments into registered pension schemes, qualifying childcare vouchers and some other employer-supported childcare, bicycles and cyclist safety equipment, and company cars with CO2 emissions of 75 g/km or less.[5] Childcare voucher and directly contracted employer childcare schemes are closed to new applicants, with continuing entitlement depending on when an employee joined the scheme and whether they remain eligible.[9]

GOV.UK guidance notes that reducing cash pay through salary sacrifice can affect statutory payments and some earnings-related and contribution-based benefits, and may reduce entitlement where average earnings fall below relevant thresholds.[7] The Pensions Regulator describes pension salary sacrifice as a contractual agreement where a worker foregoes salary in return for employer pension contributions, and it says that active membership of a pension scheme for automatic enrolment purposes cannot depend on whether a worker agrees to enter into salary sacrifice.[10] Following the November 2025 budget, the government announced that from April 2029 only the first £2,000 a year of employee pension contributions made through salary sacrifice will be exempt from National Insurance contributions, with National Insurance due on amounts above that cap.[11]

## Salary packaging in Australia

Contrary to popular belief, provisions in the FBT (Fringe Benefits Tax) act allow for the employees of private companies to utilise.[12][13]

Main article: Finance:Fringe benefits tax (Australia)

Items commonly salary packaged include:

* vehicles (either a company car or through a novated lease)
* mobile phones
* laptop computers

Charities and public not for profit hospitals can do this most effectively as they are exempt from fringe benefits tax up to a certain limit per employee (from 1 April 2014 the amounts are $9,010 for Not-for-Profit Public Hospitals and $15,900 for Public Benevolent Institutions). Additional benefits can be packaged above these limits through novated leasing, meals and entertainment or venue hire (holiday accommodation)[14] as well as personal superannuation contributions subject to Concessional Contributions Caps.[15]

The Australian Salary Packaging Industry Association [16] is the professional body for outsourced salary packaging service providers.

The Australian Taxation Office[17] administers Fringe Benefits Tax and the FBT Exemptions that facilitate salary packaging for employees of not-for-profit healthcare organisations and public benevolent institutions.

The long-awaited FBT exemption for electric vehicles passed through the Senate in Dec 2022. This move is part of a broader plan by the Government to increase the adoption rates of EVs in Australia, which are among the lowest in the developed world.[18][19]

## See also

* Fiscal illusion

## References

1. ↑ Clara, Parker. "Salary packaging". https://moneysmart.gov.au/income-tax/salary-packaging.
2. ↑ "EIM42750: What is a salary sacrifice?". HM Revenue and Customs. https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim42750.
3. ↑ 3.0 3.1 "EIM42753: Salary sacrifice: how the changes to the employment contract are made". HM Revenue and Customs. https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim42753.
4. ↑ "EIM42755: Salary sacrifice: income tax effects of salary sacrifice". HM Revenue and Customs. https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim42755.
5. ↑ 5.0 5.1 "Optional remuneration arrangements (480: Appendix 12)". HM Revenue and Customs. 30 December 2019. https://www.gov.uk/guidance/optional-remuneration-arrangements-480-appendix-12.
6. ↑ 6.0 6.1 "Deductions from pay and wages". Advisory, Conciliation and Arbitration Service. 7 January 2025. https://www.acas.org.uk/deductions-from-pay-and-wages.
7. ↑ 7.0 7.1 7.2 "Salary sacrifice for employers". HM Revenue and Customs. https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye.
8. ↑ "Optional remuneration arrangements". HM Revenue and Customs. 9 April 2020. https://www.gov.uk/government/publications/optional-remuneration-arrangements/optional-remuneration-arrangements.
9. ↑ "Childcare vouchers and other employer schemes". https://www.gov.uk/help-with-childcare-costs/childcare-vouchers.
10. ↑ "Pension schemes under the employer duties". The Pensions Regulator. https://www.thepensionsregulator.gov.uk/en/document-library/automatic-enrolment-detailed-guidance/4-pension-schemes-under-the-employer-duties.
11. ↑ "Changes to salary sacrifice for pensions from April 2029". HM Treasury. 26 November 2025. https://www.gov.uk/government/publications/changes-to-salary-sacrifice-for-pensions-from-april-2029/changes-to-salary-sacrifice-for-pensions-from-april-2029.
12. ↑ salary packaging benefits
13. ↑ "Federal Register of Legislation - Australian Government". 15 September 2023. http://www.comlaw.gov.au/Series/C2004A03280.
14. ↑ Salary Packaging
15. ↑ Concessional Contributions Caps
16. ↑ Australian Salary Packaging Industry Association
17. ↑ Australian Taxation Office
18. ↑ "Eziway News". https://eziway.net.au/ESP/SalaryPackaging/eziway-news-and-articles-details?QXJ0aWNsZUlkPTc0.
19. ↑ "Treasury Laws Amendment (Electric Car Discount) Bill 2022" (in en-AU). https://www.aph.gov.au/Parliamentary_Business/Bills_LEGislation/Bills_Search_Results/Result?bId=r6876.

* v
* t
* e

Employment

Classifications|

* Casual
* Contingent
* Full-time
* Part-time
* Self-employed
* Skilled
* Independent contractor
* Temporary
* Tenure
* Unskilled
* Wage labour

Hiring|

* Application
* Background check
* Business networking
* Contract
* Cover letter
* Curriculum Vitae (CV)
* Drug testing
* e-recruitment
* Employment counsellor
* Executive search (list)
* Induction programme
* Job fair
* Job fraud
* Job hunting
* Job interview
* Labour brokering
* Overqualification
* Onboarding
* Personality-job fit theory
* Person-environment fit
* Probation
* Reference
* Résumé
* Simultaneous recruiting of new graduates
* Underemployment
* Work-at-home scheme

Roles|

* Mentorship
* Co-op
* Employee
* Employer
* Internship
* Job
* Permanent
* Permatemp
* Supervisor
* Volunteer

Worker class|

* Blue-collar
* Green-collar
* Grey-collar
* Pink-collar
* White-collar

Career and training|

* Apprenticeship
* Avocation
* Career assessment
* Career counseling
* Career development
* Coaching
* Creative class
* Education
* Continuing education
* Continuing professional development
* E-learning
* Employability
* Further education
* Graduate school
* Induction training
* Initial Professional Development
* Knowledge worker
* Licensure
* Lifelong learning
* Practice-based professional learning
* Professional association
* Professional certification
* Professional development
* Professional school
* Reflective practice
* Retraining
* Vocational education
* Vocational school
* Vocational university
* Mentorship
* Occupational Outlook Handbook
* Practice firm
* Profession
* Tradesman
* Vocation

Attendance|

* Break
* Career break
* Furlough
* Gap year
* Leave of absence
* Long service leave
* No call, no show
* Sabbatical
* Sick leave
* Time clock

Schedules|

* Four-day week
* Eight-hour day
* 996
* Flextime
* Overtime
* Retroactive overtime
* Shift work
* Telecommuting
* Working time
* Workweek and weekend

Wages and salaries|

* Income bracket
* Income tax
* Living wage
* Maximum wage
* National average salary
* World
* Europe
* Minimum wage
* Canada
* Hong Kong
* Europe
* United States
* Progressive wage
* Singapore
* Overtime rate
* Paid time off
* Performance-related pay
* Salary
* Salary cap
* Working poor

Benefits|

* Annual leave
* Casual Friday
* Day care
* Disability insurance
* Health insurance
* Life insurance
* Marriage leave
* Parental leave
* Pension
* Sick leave
* Take-home vehicle

Safety and health|

* Epilepsy and employment
* Human factors and ergonomics
* Industrial noise
* Karōshi
* Protective clothing
* Occupational burnout
* Occupational disease
* Occupational exposure limit
* Occupational health psychology
* Occupational injury
* Occupational stress
* Repetitive strain injury
* Sick building syndrome
* Work accident
* Occupational fatality
* Workers' compensation
* Workplace phobia
* Workplace wellness

Equality|

* Affirmative action
* Equal pay for women
* Gender pay gap
* Glass ceiling

Infractions|

* Corporate abuse
* Accounting scandals
* Corporate behaviour
* Corporate crime
* Control fraud
* Corporate scandals
* Discrimination
* Dress code
* Employee handbook
* Employee monitoring
* Evaluation
* Labour law
* Sexual harassment
* Sleeping while on duty
* Wage theft
* Whistleblower
* Workplace bullying
* Workplace harassment
* Workplace incivility

Willingness|

* Boreout
* Civil conscription
* Conscription
* Dead-end job
* Extreme careerism
* Job satisfaction
* Organizational commitment
* McJob
* Refusal of work
* Slavery
* Bonded labour
* Human trafficking
* Labour camp
* Penal labour
* Peonage
* Truck system
* Unfree labour
* Wage slavery
* Workaholic
* Work aversion
* Work ethic
* Work–life balance
* Downshifting (lifestyle)
* Slow living

Termination|

* At-will employment
* Dismissal
* Banishment room
* Constructive dismissal
* Wrongful dismissal
* Employee exit management
* Exit interview
* Layoff
* Notice period
* Pink slip
* Resignation
* Letter of resignation
* Restructuring
* Retirement
* Mandatory retirement
* Retirement age
* Severance package
* Golden handshake
* Golden parachute
* Turnover

Unemployment|

* Barriers to Employment
* Depression
* Great Depression
* Long Depression
* Discouraged worker
* Frictional unemployment
* Full employment
* Graduate unemployment
* Involuntary unemployment
* Jobless recovery
* Phillips curve
* Recession
* Great Recession
* Great Recession job losses
* List of recessions
* Recession-proof job
* Reserve army of labour
* Types of unemployment
* Unemployment Convention
* Unemployment benefits
* Unemployment extension
* Unemployment insurance
* Unemployment rates
* Employment rates
* Employment-to-population ratio
* Structural unemployment
* Technological unemployment
* Wage curve
* Youth unemployment

See also templates

* Aspects of corporations
* Aspects of jobs
* Aspects of occupations
* Aspects of organizations
* Aspects of workplaces
* Corporate titles
* Organized labor

0.00

(0 votes)

Original source: https://en.wikipedia.org/wiki/Salary packaging. Read more

|

Retrieved from "https://handwiki.org/wiki/index.php?title=Finance:Salary_packaging&oldid=4189828"
*[v]: View this template
*[t]: Discuss this template
*[e]: Edit this template