How do I salary package a car through my employer?

Salary packaging a car means using part of your pre-tax salary to pay for car expenses, which reduces your taxable income. Your employer pays fringe benefits tax (FBT) on the benefit, unless the car is an eligible electric vehicle (currently FBT-exempt). You must arrange the package before you are paid. Check with your employer if they offer this benefit and read the ATO guidance on cars and FBT. Our [super and packaging](/topics/super-and-packaging) page has more details.

What is the casual loading and how does it affect my hourly rate?

Casual loading is an extra 25% paid on top of the base hourly rate to compensate for lack of paid leave. For example, the National Minimum Wage of $26.44 per hour becomes $33.05 per hour for casuals. When using our timesheet, tick the casual loading checkbox to add 25% to your base rate – do not enter a rate that already includes loading.

How is tax calculated on my annual salary?

Tax uses the 2026–27 resident rates: nil on the first $18,200, 15% on the next $26,800 (to $45,000), 30% on the next $90,000 (to $135,000), 37% on the next $55,000 (to $190,000), and 45% above that. The Medicare levy of 2% is added. Our calculator applies these rates to your annual gross pay (hourly × hours per week × 52) to estimate take-home pay.

How to Salary Package a Car: Hourly to Annual Pay and Tax Guide

Annual pay is your hourly rate × 38 hours per week × 52 weeks, with super paid on top and tax deducted using the 2026–27 resident scale plus Medicare levy.

Understanding Your Hourly to Annual Conversion

To work out your annual pay from an hourly rate, multiply your hourly rate by the number of hours you work each week, then multiply by 52 weeks. For a standard full-time role, we assume 38 hours per week – the ordinary hours under most awards. This gives a simple annual gross figure before tax and super.

For example, if your hourly rate is $30.00:

Weekly pay = $30.00 × 38 = $1,140.00
Fortnightly pay = $1,140.00 × 2 = $2,280.00
Annual gross = $30.00 × 38 × 52 = $59,280.00

This conversion assumes the same rate every week, no unpaid overtime, no penalty rates, and no salary sacrifice. It is an estimate, not a binding pay calculation.

National Minimum Wage and Award Rates

The Fair Work Ombudsman sets the National Minimum Wage from 1 July 2026 at $26.44 per hour, or $1,004.90 per week for 38 hours. Many employees are covered by awards that may have higher minimum rates. Casual employees receive a 25% loading on top of the base rate – for the National Minimum Wage that becomes $33.05 per hour. Always check your specific award using the pay guides on the Fair Work Ombudsman site.

Superannuation Paid on Top

Your employer must pay superannuation guarantee contributions of 12% of your ordinary earnings, on top of your salary. This is not deducted from your pay – it is an additional cost to your employer. The super guarantee applies up to a maximum contribution base of $270,830 per year (2026–27). For most workers, super adds roughly 12% to your total remuneration package.

Tax and the Medicare Levy

Once you have your annual gross figure, tax is calculated using the 2026–27 resident tax brackets:

$0 – $18,200: nil
$18,201 – $45,000: 15% on the excess over $18,200
$45,001 – $135,000: 30% on the excess over $45,000
$135,001 – $190,000: 37% on the excess over $135,000
$190,001 and above: 45% on the excess over $190,000

In addition, the Medicare levy of 2% applies to most taxpayers. Our calculator uses the 2025–26 single reduction thresholds because the 2026–27 thresholds were not confirmed at the time of calculation. The result is an estimate of your annual take-home pay after tax and Medicare.

How to Salary Package a Car

Salary packaging a car is a popular way to reduce your taxable income. Under a salary sacrifice arrangement, you and your employer agree to use part of your pre-tax salary to pay for car expenses (lease, fuel, maintenance). This lowers your taxable income, so you pay less income tax. However, your employer must pay fringe benefits tax (FBT) on the private use of the car, unless an exemption applies.

The Australian Taxation Office explains that FBT on cars is calculated using either the statutory method or the operating cost method. For eligible electric cars, there is currently an FBT exemption, making salary packaging even more attractive. The super and packaging page on our site covers this in more detail.

Before setting up a car salary package, check with your employer whether they offer it and what benefits are available. Salary packaging is usually more beneficial for middle to high income earners because their marginal tax rate is higher. You may want to seek professional tax advice to see if it suits your situation.

Important Disclaimer

Annual pay shown here is hourly rate × hours per week × 52. It assumes the same rate every week, no unpaid overtime, no penalty rates, no allowances, and no salary sacrifice. Super is estimated at 12% of ordinary earnings only, paid on top, and stops at the $270,830 maximum contribution base. Tax is the 2026–27 resident scale with the full tax-free threshold. Medicare uses the 2025–26 single reduction thresholds because the 2026–27 reduction thresholds were not confirmed here. HELP, the Medicare levy surcharge, and salary packaging are not deducted. This is an estimate, not a determination of your pay or tax.