Salary Packaging and FBT: What is a Fringe Benefit and when does the year end?

Is salary packaging a fringe benefit?

A common question is, is salary packaging a fringe benefit?

In many cases, yes.

Salary packaging arrangements often include benefits that are provided as part of an employee’s overall remuneration package instead of taking that value entirely as salary.

These benefits can include things like living expenses, meal entertainment, or other approved benefits offered through an employer’s salary packaging program.

However, not every packaged benefit is treated in the same way. The arrangements available can vary depending on the type of employer and the benefits offered through their program.

If you are new to salary packaging, our guide on what is salary sacrifice provides a helpful overview of how these arrangements work.

What is FBT in the context of salary packaging?

Another question people often ask is, what is FBT salary packaging?

FBT stands for Fringe Benefits Tax. It is part of the framework that sits behind certain employee benefits provided through salary packaging arrangements.

Most employees come across the term because it helps determine how some salary packaging programs are structured and why certain benefits may be available through one employer but not another.

The rules can vary depending on the organisation and the types of benefits offered. For employees, the key thing to understand is that FBT forms part of the broader salary packaging landscape and helps shape how different arrangements operate.

When does the salary packaging year end?

Many people assume it follows the Australian financial year, but that is not the case.

The salary packaging year follows the Fringe Benefits Tax year, which runs from:

1 April to 31 March

This means salary packaging caps and entitlements are typically measured across this period rather than from 1 July to 30 June.

For employees who are new to salary packaging, this is often one of the most useful dates to remember.

When does salary packaging reset?

For most arrangements, salary packaging caps reset on:

1 April each year

This marks the beginning of a new salary packaging year.

Depending on your employer’s arrangements, any unused cap amounts may not carry over into the next FBT year. This is why many employees choose to review their salary packaging arrangements before the end of March.

When does salary packaging start?

For most employees, salary packaging begins once they have enrolled with their employer’s salary packaging provider and the arrangement has been set up.

New employees generally do not need to wait until 1 April to start participating. In many cases, eligible employees can join the program at any time during the year.

The commencement date will depend on the employer’s processes and the arrangements they have in place.

If your employer already offers salary packaging, your HR, payroll team or provider can confirm when your arrangement can begin and what you need to do to get started.

How employer type can influence salary packaging

Not all salary packaging arrangements look the same.

Different employer types may have access to different salary packaging benefits and entitlements.

For example, organisations in the not-for-profit sector may offer arrangements that differ from those available in the private sector. Our guide to not for profit salary packaging explains how these arrangements can vary.

Some employers may also offer access to benefits such as salary packaging living expenses and meal entertainment as part of their overall packaging program.

The benefits available to you will always depend on your employer and the arrangements they offer.

What happens at the end of the salary packaging year?

As 31 March approaches, many employees check their remaining balances and review how their packaging arrangements are tracking.

Depending on the program, annual entitlements may reset on 1 April, which is why it can be useful to understand how your arrangement works before the year ends.

If your workplace already offers salary packaging, your employer or provider can explain how annual balances and key dates are managed. If your organisation does not yet have a formal program in place, the SalaryMax section below explains another option available to eligible employers.

Common misconceptions about salary packaging and FBT

The salary packaging year and financial year are the same

They are usually different. The salary packaging year generally runs from 1 April to 31 March.

Everyone receives the same salary packaging benefits

The benefits available can vary depending on your employer and the type of organisation you work for.

You can only start salary packaging at the beginning of the FBT year

Many employees can start salary packaging during the year once their arrangements have been set up.

Salary packaging is complicated

There can be a lot of terminology involved, but most providers make the process straightforward and can help explain how your arrangements work.

Staying on top of your salary packaging year

A few simple habits can make salary packaging easier to manage.

Many employees find it helpful to:

• Keep track of key dates, particularly 31 March and 1 April.
• Review their arrangements before the salary packaging year resets.
• Understand which benefits are available through their employer.
• Speak with their provider if they have questions about their packaging arrangements.

A little planning can make the process feel much more straightforward.

Making Salary Packaging easier with SalaryMax

Not every eligible organisation has a dedicated salary packaging provider in place. Some employers manage salary packaging internally, while others may be exploring how to introduce it for the first time.

SalaryMax gives eligible Australian organisations a practical way to offer and manage salary packaging for their employees. The solution can support benefits such as living expenses and meal entertainment, with a structured approach that helps simplify administration for employers.

For employees, SalaryMax provides an easy way to access and manage the salary packaging benefits available through their workplace. For employers, it can reduce the work involved in managing a program internally while providing employees with a more straightforward experience.

If your organisation is eligible but does not currently offer salary packaging, or you are looking for a simpler way to manage an existing program, explore salary sacrificing with SalaryMax to see how Corporate Prepaid Cards can support your organisation.

Understanding the key dates

Salary packaging and FBT can seem confusing at first, particularly when the salary packaging year does not align with the financial year.

In many cases, salary packaging arrangements involve fringe benefits, but the benefits available and how they are managed will depend on the employer and their program.

The key dates are relatively simple. The FBT year runs from 1 April to 31 March, with annual salary packaging caps generally resetting from 1 April.

Whether you already have an arrangement in place or are exploring salary packaging for the first time, understanding these dates and the benefits available through your workplace is a good place to start.