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How to Allocate Income with Salary Packaging

Learn how to correctly allocate income with salary packaging to reflect your true taxable income in TaxTank.

Updated yesterday

If your payslip includes salary packaging or other adjustments like allowances, pre-tax or post-tax deductions, it’s important to record these correctly to reflect your true gross income and tax position in TaxTank.

Here’s how to do it.

What is Salary Packaging?

Salary packaging (also known as salary sacrifice) is when an employee agrees to receive less take-home pay in return for their employer paying for certain benefits on their behalf. These can include things like super contributions, a novated lease, or some living expenses if you're eligible.

Because salary packaging involves deductions from your gross pay, it’s essential to reflect those amounts correctly in your income records to ensure your taxable income is accurate.

Step 1: Allocate the Income

When you're allocating income from either Bank Feeds or the Work Tank, select the 'Salary or Wages' category.

This will prompt the ‘Add Adjustments’ button to appear.

Step 2: Add Adjustments

Click ‘Add Adjustments’ to record any components of your pay that don’t fall into standard income – such as salary packaging deductions, allowances, or reimbursements.

You can add one or multiple adjustments. These help break down your payslip to ensure the gross income recorded in TaxTank matches your actual earnings.

Which Adjustments Should I Use for Salary Packaging?

Here’s how to handle the most common elements:

Pre-Tax Deductions (e.g. Salary Packaging Items)

  • Use: Pre Tax Deductions Other

  • Effect: This amount is excluded from both net income and the Tax Summary.
    (Use this for novated lease payments, salary sacrifice super, etc.)

Post-Tax Deductions

  • Use: Post Tax Deductions Other

Effect: This amount is added to the net income and included in Item 1 of your Tax Summary.

(Only use this if the deduction was made after tax and needs to be reflected in your gross income.)

Other Common Adjustments You Might Need

Adjustment

Use for

Tax Summary Impact

Allowances (e.g. travel, phone, uniform)

Extra payments made for work-related costs

Reported under Item 2

Reimbursements

Employer reimburses you for something you paid for

Excluded from Tax Summary

Advances

Money paid in advance by employer

Excluded from Tax Summary (can be negative)

Tips

Tipped income received

Reported under Item 2

Workplace Giving

Donations made via payroll

Added to income and matched with a donation in D9

Final Check

Once you've saved the income and adjustments, you'll see each component listed in both your Work Tank and your Tax Summary. Make sure the total gross income matches your payslip and the correct items are showing in the right tax labels.

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