How southgate salary packaging: what it changes your fortnightly take-home pay

How your fortnightly take-home pay is built

Your take-home pay is the amount that lands in your bank account after your employer deducts income tax, the Medicare levy, and any other agreed amounts like super contributions or salary sacrifice. For the 2026–27 tax year, the Australian Tax Office sets these rates:

• Tax-free threshold: first $18,200 – no tax.
• Next bracket: $18,201 to $45,000 – 15 cents per dollar over $18,200.
• Next bracket: $45,001 to $135,000 – $4,020 plus 30 cents per dollar over $45,000.
• Higher brackets up to $190,000 and above.

On top of that, the Medicare levy adds 2% of your taxable income. If you earn below $28,011 (single), you pay no levy; between $28,011 and $35,013 you pay a reduced rate (10 cents per dollar over the lower threshold). Full-time workers on typical salaries pay the full 2%.

Your employer also contributes 12% superannuation on your ordinary time earnings (up to a cap of $270,830). That super is not deducted from your take-home pay – it’s an extra cost to your employer. But if you choose to salary sacrifice extra super, that amount does come out of your pre-tax salary, reducing your taxable income.

What southgate salary packaging can do for your fortnight

southgate salary packaging is a service that helps you arrange salary sacrifice with your employer. By redirecting part of your pre-tax salary to pay for benefits like a car, phone, or super, you lower your taxable income. That means less income tax and Medicare levy withheld each fortnight.

Southgate Salary Packaging Services explains that you can package a novated lease – covering fuel, lease payments, servicing, registration, insurance, tyres, and roadside assistance – all tax-free. The savings can be significant, especially if you drive a lot or have a higher marginal tax rate.

But salary packaging isn’t free money. Your employer may have to pay fringe benefits tax (FBT) on some benefits, which can reduce the overall saving. However, many benefits are FBT-exempt (like portable electronic devices, protective clothing, or electric cars under current rules) or concessional for not-for-profit employers. Southgate notes that successful packaging creates a tax saving greater than any FBT incurred.

How the Medicare levy interacts with salary packaging

The Medicare levy is calculated on your taxable income after salary sacrifice. If you package $15,000 of car expenses on a $100,000 salary, your taxable income drops to $85,000. The 2% levy then applies to $85,000 instead of $100,000 – saving you $300 in levy alone. For those near the low-income thresholds ($28,011 and $35,013), salary packaging can push you below the threshold, eliminating the levy entirely.

Remember: the Medicare levy surcharge (for singles earning over $93,000 without private hospital cover) is separate and not covered here. But salary packaging can also reduce your income for surcharge purposes.

Super and salary sacrifice

You can also salary sacrifice extra super contributions. These are taxed at 15% inside super, which is often lower than your marginal tax rate. The concessional contribution cap for 2026–27 is $32,500 (including your employer’s 12% super guarantee). If you exceed that, extra tax applies. Salary sacrificing super reduces your take-home pay now but boosts your retirement savings.

Putting it all together: your fortnightly pay

To estimate your take-home pay, start with your annual salary, subtract any salary sacrifice amounts, then apply the tax brackets and Medicare levy. Divide by 26 for a fortnightly figure. For example, a $100,000 salary with no packaging:

• Tax: about $22,467 (using the brackets)
• Medicare levy: $2,000
• Take-home: $75,533 per year, or $2,905 per fortnight.

If you package $15,000 via a novated lease:

• Taxable income: $85,000
• Tax: about $17,967
• Medicare levy: $1,700
• Take-home: $65,333 per year, or $2,513 per fortnight.

But you also get the car and its running costs paid for – so your actual disposable income may be higher. Use the Take-home pay calculator on this site to model your own situation.

What to watch out for

• Employer policy: Not all employers offer salary packaging, and those that do may limit what you can package.
• FBT: Some benefits attract FBT, which your employer may pass on to you.
• Leaving your job: Southgate advises that if you leave, your packaging stops and any remaining funds are returned to your employer, with PAYG tax deducted.
• Professional advice: Salary packaging is complex. recommends getting tax advice, especially if you’re on a middle to high income.

Conclusion

Your fortnightly take-home pay is shaped by tax brackets, the Medicare levy, and any salary sacrifice arrangements. southgate salary packaging can reduce your taxable income, saving you tax and Medicare levy, but the net benefit depends on your employer, the benefits chosen, and FBT rules. Always check the numbers with a professional or use the tools on this site to see how much extra you could keep.