Question 1

What is salary sacrifice?

Accepted Answer

Salary sacrifice (also called salary packaging) is an arrangement where you agree to receive less pre-tax salary in exchange for your employer providing a benefit of similar value. Common examples include novated car leases, additional superannuation contributions, and portable electronic devices. Because the benefit is paid from your pre-tax income, you pay less income tax.

Question 2

How does salary sacrifice reduce my tax?

Accepted Answer

When you salary sacrifice, the sacrificed amount is deducted from your gross salary before income tax is calculated. This reduces your taxable income, which means you pay less tax. The tax saving depends on your marginal tax rate — the higher your income, the greater the percentage saved on each dollar sacrificed.

Question 3

What is a novated lease?

Accepted Answer

A novated lease is a three-way agreement between you, your employer, and a finance company. Your employer deducts lease payments from your pre-tax salary (and sometimes post-tax for running costs), reducing your taxable income. You get a new or used car with the convenience of bundled running costs, and the tax benefit of salary packaging. When you change employers, the lease transfers with you.

Question 4

Is FBT payable on salary sacrifice items?

Accepted Answer

It depends on the item. Some benefits are FBT-exempt, meaning no Fringe Benefits Tax applies. Electric vehicles under the luxury car tax threshold are currently FBT-exempt. Additional super contributions are also exempt. Other items like standard petrol/diesel cars attract FBT, which is factored into the net benefit calculation of a novated lease. This calculator assumes the sacrifice is FBT-exempt for simplicity — your novated lease provider will model the exact FBT impact.

Question 5

Can I salary sacrifice into super?

Accepted Answer

Yes. Additional super contributions made via salary sacrifice are taxed at 15% inside the super fund (instead of your marginal rate). This can be a significant saving if your marginal rate is 30% or higher. The concessional contributions cap is $30,000 per year (including employer contributions), so check your total before committing to a large amount.

Question 6

Does salary sacrifice affect my super?

Accepted Answer

It depends on your employment agreement. Most employers calculate the 12% super guarantee on your pre-sacrifice salary (called OTE — ordinary time earnings), so your super is not reduced. However, some employers calculate super on the post-sacrifice amount. Check with your employer or HR department.

Question 7

What happens if I change jobs?

Accepted Answer

For novated leases, the lease can transfer to your new employer if they agree to the arrangement. If they don't, you can take over the lease payments personally. For super salary sacrifice, the arrangement simply ends and you can set up a new one with your next employer.

Question 8

Are the results from this calculator accurate?

Accepted Answer

The results are estimates based on ATO tax brackets and the Medicare levy. Actual savings depend on your specific salary packaging arrangement, whether FBT applies, your employer's policies, and other individual circumstances. Use these results for planning and comparison. For a precise quote on a novated lease, speak with a broker.

	Before	After	Difference
Gross salary	$85,000	$70,000	-$15,000
Taxable income	$85,000	$70,000	-$15,000
Income tax	$16,020	$11,520	-$4,500
Medicare levy	$1,700	$1,400	-$300
Total tax	$17,720	$12,920	-$4,800
Take-home pay	$67,280	$57,080	-$10,200

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