How can salary packaging benefit your business?

What is salary packaging?

Salary packaging allows your employees to pay for certain living expenses from their gross salary. As those expenses are deducted first, tax is calculated on the remaining amount, lowering their taxable salary and the amount of PAYG they owe.

The things employees can sacrifice salary for are wide-ranging and can include: 

    • Electronic devices like phones, notebooks, laptops, and tablets

    • Education and insurance

    • Meals and entertainment

    • One of the most popular choices – a novated lease for a new, used or existing car.

Why is salary packaging so important?

The cost of living is top of mind for most workers right now, especially with relentless rounds of interest rate rises and soaring inflation. As well, the tight labour market and the war for talent are giving more staff than ever before an opportunity to reassess job prospects and possibilities.

In this environment, employees increasingly look at factors besides base pay rates when on the hunt for the perfect position, which is why forward-thinking employers are offering flexible, tax-effective salary packages with a range of in-demand perks and benefits.

See how leading Healthcare company attracts, engages, and retains top talent with perks and pay solutions tailored to the team’s needs. 

Salary packaging a car in Australia

Benefits for employees

Buying a car is a big deal for most people and comes with a hefty price tag. And that’s even before you consider running, insurance and service costs. 

Salary sacrificing a car versus buying one outright has many advantages which are making novated leases and salary packaging an increasingly popular option for employees.

A Novated lease is essentially a three-way agreement between an employee, employer and finance provider to use the employee’s pre-tax salary to make payments for leasing and running a car.

For employees, the benefits of car salary packaging and novated leases include:

    • Tax savings. Since the novated lease rentals are deducted from some of your employee’s pre-tax income, and since they are GST-free, they get both a PAYG and GST* tax break.

    • Hassle-free expense management. All expenses are managed through regular pay deductions for the lease, fuel, insurance and service.

    • A way to find the right car at a reasonable price. Your staff can lease either a new or used car to suit their budget, or even choose one of the latest generations of hybrid or electric vehicles (EVs).

Benefits for employers

Car salary sacrificing has huge advantages for employers too. It allows you to:

    • Strengthen your Employer Value Proposition. Competition for good employees is fierce, and car salary packaging is a way to offer the same financial incentives as more sizeable businesses. More than 7 out of 10 employees* are interested in accessing salary packaging, yet with few having access, novated leasing could be a powerful tool to drive financial wellbeing and enhance your EVP.

    • Boost your employees’ salaries, at no cost. Expenses for car salary packaging are deducted from participating employees’ salaries with no start-up costs or ongoing fees for your business. With the cost of living increasing and cars being one of Australia’s biggest household expenditures, car salary packaging gives you a meaningful and impactful way to support employees’ financial wellbeing.

    • Minimise payroll tax. If your business qualifies for payroll tax, you could minimise your liability by reducing your employees’ taxable income through a novated lease arrangement.

    • A strong retention hook. Car salary packaging and novated leases are strong retention tools. 

Falling prices, improved technology, better infrastructure and favourable incentives are combining to create explosive growth for EV and plug-in hybrid (PHEV) adoption in Australia, and offering employees salary-packaged EVs will be a key way to boost your sustainability credentials and strengthen your EVP.

Flare makes car salary packaging easy

Offering your employees salary-packaged benefits like a novated lease for an EV can be game-changing. And with Flare, there’s no need to put it in the too-hard basket or go it alone with a DIY solution.

Flare’s experts are well-versed in all types of cars and we can tap into our dealership networks to make EVs and PHEVs more affordable for your employees.

Flare’s fully digital process streamlines the car salary packaging experience, making it faster, easier, and more convenient for both you and your employees.

With Flare’s car salary packaging, customers like healthcare company Healius and recruitment services provider Skout Solutions are experiencing the following impressive benefits:

  • Healius employees have saved around a quarter of a million dollars since 2021 and the retention rate for staff with a Flare lease is tracking at 98 per cent.
  • Almost 10 per cent of Skout Solution’s employees are using Flare novated leases and it’s saving them thousands of dollars in monthly repayments.


Learn more about how Flare can help you harness the benefits of salary packaging for your business.

*If you purchase a car and the price is more than the car limit, the maximum GST credit you can claim (except in certain circumstances) is one-eleventh of the car limit, which is $5,885 in 2022-23.

8 Ways to save on your car running costs… that you can implement with 1 simple action

Between the third and the last quarter of 2022, the annual inflation rate in Australia climbed from 7.3% to 7.8%. It surpassed market forecasts to become the highest inflation rate since 1990.

Transport saw the biggest increase in price amongst food and housing. With Australians spending 15.1% of their income on transport costs (a staggering $384.86 per week on average), many of them are on the lookout for ways to save on their car running costs. 

If you’re one of them, don’t just chase the best deal on a new or used car and wait for cheap fuel days. In this article, we’ll take you through eight ways to save on your car running costs that will make a substantial impact on your budget. At the end, we’ll also show you the one thing you can do to implement all tips at once and compound the savings.

Now buckle up and let’s get started!

Reduce fuel cost

One of the most significant ongoing expenses of owning a car is fuel. There are several ways to reduce your fuel cost:

  1. Drive more efficiently
    By driving more efficiently, you can reduce the amount of fuel you use, make your tyres and brakes last longer and avoid servicing your car earlier than planned. Some tips for driving more efficiently include accelerating slowly, maintaining a steady speed, and avoiding sudden stops or starts. How to remember to do that? Simply imagine your child falling asleep in your car and adjust your driving style so you can enjoy the peace… for a little longer.
  1. Keep your tyres inflated
    It’s important to check and maintain your tyre pressure. Under-inflated tyres create more drag on the road, increasing fuel use. Under-inflated tyres cause erratic wear that results in expensive replacements and an increased chance of blowouts.
  1. Check your wheel alignment
    Every 10,000km, or twice a year (whichever comes first), you should also check your wheel alignment. This will ensure that all of your wheels are working together properly and will increase fuel efficiency, reduce suspension wear and extend the life of your tyres.

Reduce maintenance cost

Regular oil changes, air filter replacements, and tire rotations can all help your car run more efficiently, improve its fuel efficiency and avoid high repair costs. But regular maintenance can also be expensive. So here are some tips to reduce your maintenance costs:

  1. Follow the recommended maintenance schedule
    By following the manufacturer’s recommended maintenance schedule, you can prevent more costly repairs down the road.
  1. Choose a reliable car
    When purchasing a car, choose a reliable make and model that is less likely to require frequent repairs. Sometimes spending a little more in the short term will help you spend less in the long run.

Reduce insurance cost

We all know how frustrating it is to compare insurance policies, premiums and payment options,  but shopping around, comparing prices and negotiating with your current provider can save you hundreds of dollars per year. Here are some other things you can do to save on car insurance:

  1. Pay annually instead of monthly
    Many people pay by the month for their insurance policies because it seemed cheaper at the time. But they don’t know that this could cost them hundreds per year.
  1. Bundle your policy with other products
    Many insurance companies offer discounts if you bundle multiple policies, such as car and home insurance.
  1. Increase your excess
    A higher excess can significantly reduce your monthly insurance premiums. If you can afford it, this is certainly an option to consider.

And if you want to discover all the ways you can save on car insurance, you can read this guide from Canstar. There you have it: the 8 ways you can save on your car running cost. Now you can put them into action and rescue your household budget from the high cost of living. Do you want to know how to bundle all those savings into one simple strategy?


Introducing Novated leasing

Novated leasing is an alternative to traditional car ownership that can save you money. With a Novated lease, you essentially “lease” a car through your employer. Your employer deducts some of the lease payments and running costs from your pre-tax salary, which can reduce your taxable income and save you money on income tax.

Here is how, through Flare Novated leasing, you can compound the savings and multiply the benefits:

  • Save on tax and car running costs.
    By salary packaging your car with our Novated lease, you could enjoy significant tax reductions and GST savings** on your car purchase, fuel, tyres, servicing and maintenance.
  • Get the car you want, now.
    We’ll help you get into your new car quickly by sourcing your vehicle, organising a test-drive, helping you buy it, and arranging the delivery. So you can secure the car you want today.
  • Get better vehicle pricing.
    Why not benefit from Flare’s buying power? Our team of car experts does the hard work to negotiate on your behalf and secure great deals in our fleet network for both new and used cars.
  • Tax benefits.
    You can take advantage of the tax benefits, such as income tax savings and reduced GST costs. Some of the lease payments are taken out of your pre-tax income, which means you could afford a more expensive car than you would with traditional financing.
  • More efficient vehicles.
    You can save by choosing a cheaper-to-run vehicle, such as a fuel-efficient car, an Electric Vehicle or a plug-hybrid vehicle. With the recently introduced legislation, EVs with an RRP under $89,332 are exempt from the 47% fringe benefits tax if provided through a novated lease. This could save you $9,000 per year on average compared to an Internal Combustion Engine vehicle with a Novated lease.
  • Lease a new, used or existing car.
    With a Novated lease, you aren’t limited to a new car, but can get almost any car of choice, new or used, as long as it is considered a car for fringe benefits purposes.* You can even lease your existing car if it is less than 12 years old at the end of the lease.

Novated leasing is easy and convenient with Flare. Our fully digital Novated lease process is completely paperless from start to finish, making it simpler, faster, and better for you and the environment. A Flare cars concierge manages every step of the process, sourcing your vehicle, organising a test-drive, helping you buy it, and arranging the delivery.

Find out how much you can save with Flare Cars.

*For fringe benefits tax (FBT) purposes, a car is any of the following: a sedan or station wagon,  any other goods-carrying vehicle with a carrying capacity of less than one tonne, such as a panel van or utility (including four-wheel drive vehicles) and/or any other passenger-carrying vehicle designed to carry fewer than nine passengers. 

**If you purchase a car and the price exceeds the car limit, the maximum GST credit you can claim (except in certain circumstances) is one eleventh of the car limit, which is $5,885 in 2022-23.

Between the third and the last quarter of 2022, the annual inflation rate in Australia climbed from 7.3% to 7.8%. It surpassed market forecasts to become the highest inflation rate since 1990. Transport saw the biggest increase in price amongst food and housing. With Australians spending 15.1% of their income on transport costs (a staggering […]