Salary Packaging Calculator Ato

Salary Packaging Formula:

\[ \text{Net Salary} = (\text{Gross Salary} - \text{Packaged Amount}) - (\text{Tax} + \text{Medicare Levy}) \]

Gross Salary (AUD):

AUD

Packaged Amount (AUD):

AUD

Tax (AUD):

AUD

Medicare Levy (AUD):

AUD

Net Salary:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Salary Packaging?

Salary packaging (also known as salary sacrifice) is an arrangement between an employer and employee where the employee agrees to receive part of their pre-tax salary as benefits instead of as cash in hand. This can reduce taxable income and increase take-home pay.

2. How Does the Calculator Work?

The calculator uses the following formula:

\[ \text{Net Salary} = (\text{Gross Salary} - \text{Packaged Amount}) - (\text{Tax} + \text{Medicare Levy}) \]

Where:

Gross Salary — Total salary before any deductions
Packaged Amount — Value of benefits received pre-tax
Tax — Income tax calculated on reduced taxable income
Medicare Levy — 2% of taxable income (for most taxpayers)

Explanation: The packaged amount is deducted from gross salary before tax is calculated, potentially reducing your overall tax burden.

3. Importance of Salary Packaging

Details: Salary packaging can significantly increase your take-home pay by reducing your taxable income. It's particularly beneficial for employees in the not-for-profit sector, healthcare workers, and some public sector employees.

4. Using the Calculator

Tips: Enter all amounts in Australian dollars. The packaged amount cannot exceed your gross salary. Tax and Medicare Levy should be calculated based on your reduced taxable income (gross salary minus packaged amount).

5. Frequently Asked Questions (FAQ)

Q1: What can be included in salary packaging?
A: Common items include vehicles, superannuation, mortgage/rent payments, school fees, and credit card repayments.

Q2: Are there limits to salary packaging?
A: Yes, the ATO sets annual limits (e.g., $9,010 for meal entertainment, $15,900 for general living expenses for not-for-profit employees).

Q3: Does salary packaging affect superannuation?
A: Salary sacrificed super contributions count toward your concessional contributions cap ($27,500 in 2023-24).

Q4: Who is eligible for salary packaging?
A: Most employees can salary sacrifice, but some industries (especially not-for-profit) have special concessions.

Q5: How does FBT apply to salary packaging?
A: Many benefits are FBT-exempt for certain employers (e.g., public hospitals, charities). Your employer handles FBT obligations.