There’s a good reason why more Australians are asking about salary packaging, and it’s not just tax time. Whether you’ve heard it called salary sacrifice, remuneration packaging, or something else entirely, the idea is the same: it’s a way to make your money work smarter by paying for certain things before the taxman takes a slice.

At WhipSmart, we talk to drivers and employees every day who are curious about how this works; especially when it comes to packaging a car lease. So in this article, we’re breaking down what salary packaging actually means, how it compares to other pay arrangements, and why it might leave you with more in your pocket.

What Is Salary Packaging?

Put simply, salary packaging is an arrangement between you and your employer where part of your pre-tax income goes towards benefits, instead of coming to you as regular take-home pay.

You agree to “package” a portion of your salary in exchange for things like:

• A novated lease (car lease)
• Superannuation contributions
• A laptop or mobile phone
• Rent, mortgage payments, or living expenses (for some sectors)

Because these benefits are paid for out of your pre-tax salary, your taxable income goes down, which can lead to real savings. In many cases, that means more disposable income than you’d have if you paid for the same items out of your after-tax pay.

For example:

If you earn $80,000 and package $10,000 for a car lease, you only pay income tax on $70,000. That $10,000 goes toward a car, insurance, maintenance, and running costs – often in a bundle.

Salary Packaging vs Salary Sacrifice: Is There a Difference?

You might’ve heard both terms – salary packaging and salary sacrifice – used interchangeably. That’s because they really do mean the same thing.

In some industries or states, “salary sacrifice” is the more common term. In others, you’ll hear “salary packaging.” They both refer to the same arrangement: giving up part of your gross income in exchange for non-cash benefits of equal value.

So don’t get caught up in the wording. What matters is how your package is structured, and whether it’s actually delivering financial benefits based on your lifestyle and tax bracket.

What Are the Benefits of Salary Packaging?

Here’s where it gets interesting. The main advantage of salary packaging is tax efficiency. Because you’re reducing your taxable income, you may pay less in income tax, and end up with more usable income overall.

But it’s not just about tax. Done right, salary packaging can offer:

• Predictable budgeting — fixed monthly costs on essentials like cars and maintenance

• Discounted rates — through fleet pricing or bundled services

• Time savings — because expenses are managed on your behalf

• Workplace flexibility — especially if your employer supports a range of packaging options

That said, salary packaging works best when it’s tailored to your personal circumstances. If it’s not structured properly, you might miss out on potential savings — or find that some benefits don’t suit your lifestyle as well as expected. That’s why WhipSmart takes the time to walk you through the process, helping you understand what you can package, what makes the most sense financially, and how it all fits within current tax rules. With the right guidance, salary packaging can be simple, effective, and genuinely rewarding.

So Why Are Cars the Most Popular Thing to Package?

Good question, and one, our team at WhipSmart definitely knows a thing or two about. 

When it comes to novated leasing, salary packaging allows you to include not just the car itself, but often the running costs too: registration, insurance, servicing, even tyres and fuel. It’s all bundled into one regular pre-tax payment, and often comes with fleet discounts and GST savings.

For EVs (electric vehicles), it gets even better: new Australian tax rules mean eligible electric cars under a certain threshold are FBT-exempt; making salary packaging an electric vehicle one of the most tax-effective ways to drive.

Final Thoughts

Salary packaging isn’t a loophole; it’s a legitimate, government-recognised way to structure your income more efficiently. But to make the most of it, you need the right setup, the right provider, and most importantly, the right advice.

Interested in salary packing your new car?

Contact us for professional advice on setting up your new novated lease!