Case study

Kate's case study - photo of nurseFind out how Kate received a 15% net salary increase of $3,574 through salary packaging.

Kate works for a Public Benevolent Institution (PBI) and is eligible to salary package through CBB Salary Packaging.

Her gross annual salary is $40,000 or $1,538 per fortnight. She claims the $18,200 tax free threshold on this job so she pays $190 per fortnight in PAYG income tax. After income tax Kate takes home $1,348 per fortnight.

Kate called CBB to investigate the benefits of salary packaging and has decided to package the maximum allowed under current ATO rules, $611.50 per fortnight plus a small service fee.

Each fortnight this tax-free amount is deducted from Kate’s salary and transferred to her CBB salary packaging account. This leaves Kate with a taxable gross income of $914 per fortnight and a PAYG income tax deduction of just $40.

After salary packaging, Kate now has fortnightly disposable income of $1,485 which is made up of her salary packaging amount of $611.50 and her after-tax income of $874. This compares to her take home income of $1,348 without packaging, a net salary increase of $3,574 per year or 15%.

Without
Salary Packaging ($)
With
Salary Packaging ($)
Gross income 1,538.46 1,538.46
SP amount 0.00 -624.15
Taxable inome 1,538.46 914.31
PAYG Tax 190.27 40.13
Take home pay 1,348.19 874.18
SP account 0.00 611.50
Net salary 1,348.19 1,485.68

A net salary increase of $3,574.80 pa or 15.17%.

Note: Salary packaging deduction of $624.15 includes fee.