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Salary Packaging for Home Care Employees

Home Care Packages

Updated 05-01-2024

Salary Packaging for Home Care Employees

Salary packaging, also known as salary sacrificing, is an Australian Taxation Office (ATO) approved method that allows eligible employees in the home care sector to allocate a portion of their pre-tax salary towards certain benefits and expenses. This strategic financial arrangement can significantly enhance the take-home pay of employees, promoting a more comfortable and efficient work-life balance.

Understanding Salary Packaging Benefits

Salary packaging is a mutually beneficial arrangement for both the employer and employee. For home care workers, packaging can cover a wide range of expenses, such as living costs, car leases, and superannuation contributions. Each package must adhere to the Fringe Benefits Tax (FBT) legislation, yet many health and care sectors enjoy FBT exemptions or concessions, making salary packaging particularly advantageous.

How Salary Packaging Works

Employees agree with their employer to forgo a portion of their pre-tax salary in return for benefits of a similar value. The process involves three main steps:

  1. Determining Eligibility: Employees must check with their employer if salary packaging is an available option for their role and if they are employed by an organisation that qualifies for FBT exemptions.
  2. Choosing Benefits: Depending on the employer’s policies, various packages may include mortgage repayments, rent, living expenses, vehicle expenses, and other work-related costs.
  3. Administration: Engaging a salary packaging provider or the employer administers the agreement to ensure compliance with taxation laws.

Maximising Take-Home Pay

Salary packaging effectively reduces the amount of income tax paid by the employee because the pre-tax income is directed towards non-taxable benefits. Therefore, the home care worker’s taxable income is lowered, and consequently, their tax liability is reduced. This arrangement can significantly increase the net income of home care employees, offering greater financial flexibility.

Example of Salary Packaging in Home Care

Consider a home care employee with an annual taxable income of $60,000. Without salary packaging, they pay tax on the entire sum. By salary packaging $15,000 for mortgage repayments, they reduce their taxable income to $45,000, leading to lower tax obligations while still enjoying the full benefit of their housing expenditure.

Tax Considerations and Compliance

Salary packaging must be meticulously structured to comply with ATO requirements. Home care employees should be aware of the following:

  • The packaged items must qualify as fringe benefits or exempt benefits.
  • Accurate records must be maintained for all transactions.
  • Reporting and documentation must align with the FBT legislation if applicable.

Employee Eligibility and Limitations

Not all home care employees may be eligible for salary packaging. Eligibility often depends on the worker’s employment terms and the nature of their employer's organisation. Additionally, there are limits imposed on salary packaging, such as the capping thresholds for FBT exemptions which vary between different types of employers in the health and community services.

Regular Reviews and Adjustments

It is wise for home care employees to regularly review their salary packaging arrangements. Life changes such as switching jobs, variations in FBT legislation, or personal financial shifts necessitate adjustment to their packaging to maintain its beneficial status.

The Role of the Employer

For home care organisations, offering salary packaging is an attractive strategy for recruiting and retaining high-calibre staff. Employers must ensure that their salary packaging policies are transparent, equitable, and that they provide clear information and support to staff considering or currently undertaking salary packaging.


Salary packaging offers home care employees a valuable opportunity to maximise their financial position through astute tax planning. Both employers and employees should seek professional financial advice to ensure their salary packaging arrangements comply with taxation laws and to optimise the benefits being provided.

About the Author

Olivia is a seasoned professional with an extensive career spanning the Aged Care sector, bringing decades of experience to her role. Her comprehensive understanding of Aged Care services and practices is a testament to her dedication. Olivia’s gratitude extends to those who have generously shared their knowledge and insights with her over the years, contributing to her wealth of expertise.

Olivia’s articles reflect her commitment to practical and informative content. They skillfully combine her industry know-how with real-world insights, providing valuable resources for navigating the complexities of the Aged Care sector. Olivia stands as a reliable advocate for delivering compassionate and effective care to elderly individuals, offering her support not only to fellow care workers and professionals but also to those seeking to gain a deeper understanding of the sector.

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