Salary packaging works by paying for something out of pre-tax income instead of post-tax income. Whether that helps you depends on your marginal rate, your employer, and whether the benefit attracts fringe benefits tax. Those three things decide almost everything.
The mechanism, briefly
If you earn a dollar and pay tax on it, you spend what is left. If your employer pays for something directly from your pre-tax salary, you spend the whole dollar. The benefit is the gap between your marginal rate and the rate applying to the packaged item — which is why it is worth more the higher your marginal rate, and worth nothing at all below the tax-free threshold.
Where FBT changes the maths
Most benefits provided to employees attract fringe benefits tax, and FBT is levied at a high rate. Where FBT applies in full, packaging usually stops making sense — the tax simply moves from you to your employer, who passes the cost back. The arrangements that work are the ones sitting in an exemption or concession, and those are specific.
Not-for-profit and health employers are the outlier
Employees of certain not-for-profits, public hospitals and charities can access capped FBT concessions that make packaging genuinely valuable — often the single largest lever available to them. If you work in that sector and are not packaging, that is worth a conversation. If you do not, be sceptical of a pitch that assumes you do.
Superannuation is usually the quieter, better lever
Concessional contributions are taxed at a flat rate inside the fund rather than at your marginal rate outside it. For anyone in a middle or upper bracket that gap is the most reliable saving available, and it does not depend on your employer offering a packaging scheme. The constraint is the annual cap, which counts employer contributions too.
The trade is real, though: the money is preserved until you meet a condition of release. It is not a saving so much as a transfer into a lower-taxed environment you cannot touch for a while. That suits some people and not others.
Both levers are worth checking before 30 June rather than after, because most of the useful options close at the end of the income year.