What is salary packaging?

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Salary packaging is a broader arrangement where employees use pre-tax income to pay for various expenses, such as superannuation contributions, laptops, or work-related expenses.

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Salary packaging can reduce your taxable income, lessening the income tax payables.

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Example: Salary packaging a laptop

Here is the difference between purchasing a $3,500 laptop with and without salary packaging.

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Note that laptops are exempt from FBT.

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By reducing your taxable income and excluding GST from the actual cost of the laptop, salary packaging helps you save a total of $1,337 in cash. 

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Moreover, if the primary purpose of purchasing the laptop is work-related, the full cost can be deducted as an expense from your salary, even if it’s not used exclusively for business purposes. 

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CTK Accounting is a full-scope accounting firm based in Wollongong, servicing clients nationally.

For advice on Tax, BAS, GST, Bookkeeping, and Payroll issues visit us at ctkaccounting.com.au

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