What Salary Packaging Plus Means for Your Pay Index

What Is Salary Packaging Plus?

Salary packaging plus is a way to swap part of your pre-tax salary for benefits like a car, laptop, or extra super contributions. The 'plus' often means an added perk – for example, a novated lease that includes running costs, or an employer contribution to your super above the guarantee. It’s common in the not-for-profit, health, and public sectors, and it can boost your take-home pay by reducing your taxable income. But how does it affect where you sit on the Australian salary index? Let’s break it down.

How Salary Packaging Plus Relates to the Salary Index

The Salary Index measures your gross ordinary-time earnings against the national line of $108,352 a year (index 100). That’s your full-time adult ordinary-time earnings before any deductions or packaging. Salary packaging plus doesn’t change that gross figure – it only redirects part of it. So if you earn $100,000 gross and package $15,000 for a car, your index is still 92.3. The index is about your earning power, not your packaged income.

Why the Index Ignores Packaging

The Australian Bureau of Statistics collects ordinary-time earnings without salary sacrifice adjustments. Your employer reports your gross salary, and that’s what the index uses. So even if you take home more after packaging, your index number stays put. That’s important if you’re comparing roles or negotiating pay – the index gives a consistent benchmark.

Real-World Examples

Consider a registered nurse in Victoria earning $85,000 a year. They work for a public hospital and salary package a car worth $12,000 annually. Their gross ordinary-time earnings remain $85,000, giving an index of 78.4 (below the national line). But their taxable income drops to $73,000, so they pay less tax. Their take-home pay increases, but their position on the index doesn’t budge.

Now take a teacher in Queensland earning $95,000. They use salary packaging plus to add $5,000 to their super. Again, gross earnings are $95,000, index 87.7. The packaging doesn’t affect the index, but it boosts their retirement savings. The industries page shows education and training sits at index 105.5 – above the national line – so a teacher on $95,000 is below that industry average.

Tax and Super Considerations

Salary packaging plus interacts with tax and super in ways that matter for your net income. The 2026–27 resident tax rates apply to your taxable income after packaging: nil up to $18,200, 15% to $45,000, 30% to $135,000, and so on. Medicare levy is 2%. By reducing taxable income, you might drop into a lower bracket. But beware of Fringe Benefits Tax (FBT) – some benefits, like cars, attract FBT, which your employer may pass on. The ATO caps certain benefits; for example, the statutory formula for car FBT uses a flat 20% rate from 2026.

Super guarantee is 12% from 1 July 2026, calculated on your gross ordinary-time earnings, not your packaged amount. So if you salary package extra super, that’s on top of the guarantee. The maximum contribution base is $270,830. Salary packaging plus can help you reach that cap faster, but it doesn’t change your index.

Where Does Salary Packaging Plus Fit in the National Picture?

The national line varies by state and industry. For instance, states like ACT (index 109.9) and WA (106.9) are above the line, while TAS (88.6) is below. If you work in a high-index state and salary package, your gross earnings already sit above average. But packaging won’t move that number.

In industries like mining (index 154.7) or professional services (114.7), salaries are high, so packaging is less about reducing tax and more about perks. In retail (75.9) or accommodation (72.5), packaging is rarer because wages are lower. The pay guides can help you see typical rates for your award.

Common Misunderstandings

Some people think salary packaging plus changes their salary index. It doesn’t. The index is a gross benchmark, not a net measure. Others assume packaging is always tax-free – but FBT can apply. And while packaging boosts take-home pay, it doesn’t affect your super guarantee or leave entitlements, which are based on gross earnings.

If you’re considering salary packaging plus, check your award or enterprise agreement. Some awards limit packaging or require employer consent. The Fair Work Ombudsman sets minimum wages, but packaging is a separate arrangement.

How to Use the Salary Index with Packaging

To see where you stand, take your gross ordinary-time earnings (before packaging) and divide by $108,352, then multiply by 100. That’s your index. If you’re below 100, you’re below the national average; above 100, you’re above. For example, a gross salary of $120,000 gives an index of 110.8. Packaging doesn’t change that.

You can also compare your index to industry or state averages using the how the index works page. That helps you see if your pay is competitive, regardless of packaging.

Final Thoughts

Salary packaging plus is a useful tool for boosting take-home pay or building super, but it doesn’t shift your position on the salary index. The index remains a pure measure of your gross earning power. When negotiating a raise or changing jobs, focus on the gross figure – that’s what the index and most benchmarks use. For more on related topics, explore our topics page.

Remember, salary packaging plus is not a one-size-fits-all. Talk to a tax advisor to see if it suits your situation. And always check your award or agreement for any restrictions.