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Don’t Pay All That Tax - Choose a Car Salary Package

Posted August 20, 2012 by wileywriter to Finance 0 0
This post was written by a EasyFinance.com Community member. The views expressed below may not reflect the views of EasyFinance.com.

Car salary packaging or salary sacrifice is the process by which employers agree to offer their employees a vehicle in exchange for smaller salaries. This is a form of compensation strategy and it has several advantages to both the employee and employers. There are various models of the strategy and this is not limited to cars only, you can salary package many other vehicles as well, be them Utes, vans and trucks.

Australian car salary packaging model

In Australia, the strategy involves employers deducting money out of the salaries of employees for contributions to the benefit, in this case- a car, for which employees must pay before taxes. This results in less taxable income. The Australian model allows employees to take smaller salaries for cars and other benefits.


Salary packaging allows employees to get their salaries as combination of benefits and cash. In the same breath, car salary packaging allows the employees to get cash and a car as the benefit. This setting allows employees to reap monetary benefits by not paying taxes on their entire salaries since the benefits, whether they are cars, laptops, childcare or even club membership might be exempted from taxation. Employers also benefit from this strategy because this is a great recruitment and retention tool.

How to negotiate for a car salary package

An integral part of a car salary packaging is the salary negotiation. Individuals can save a lot of money as far as tax payment is concerned. This is the reason why people should carefully examine their salary packages before making their commitment. The application of a car salary package depends with the position being offered to an individual. There are also other offers that may be provided with a car salary package including bonuses.

Employees should use certain tips when negotiating for their car salary package. The most important factor for an employee to recognize is their worth. Before committing to a package, an employee should consider the position they hold in the company and how much they bring in to the company.

The next step involves considering the average salary for the position being offered. Finally, if the employee knows the exact amount being offered with the position, they should find out what type of car benefit is being put into their salary package.

Buying or leasing a new vehicle is a big step and just like you look for a good deal when you choose your vehicle, you should look for a good deal on how you will pay for it. In this respect salary packaging is a real alternative to the norm and will offer very serious benefits in most cases. Like with many areas of car buying, the more you research, the more you save.

About wileywriter: Wileywriter is an independant freelancer who writes for Novated by Fleetcare. They help put you in a new car all while paying for it out of your pre-tax salary.

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