Salary Packaging is defined as the process of an employee specifying the components of their total remuneration, which may be a combination of cash salary or benefits in accordance with a menu of items allowed by an employer. It often involves the employee foregoing a part of their future entitlement to salary or wages in return for the employer providing them with benefits with the same total cost to the employer, but providing better value to the employee. The advantage of the Salary Packaging functionality is that it enables a user to design salary packaging structures that are tax efficient yet fully compliant. This is true for both commercial and not for profit organizations.
Charities and public & not for profit hospitals have legislative advantages in the items that can be paid as a benefit, as they are exempt from fringe benefits tax up to a certain limit per employee for these organisations. Salary packaged benefits in Australia generally attract Fringe Benefit Tax within the Australian taxation system, with a few exceptions - some benefits are Fringe Benefit Tax exempt, including mobile phones and laptop computers.