Salary Packaging usually consists of a novated lease which is an agreement between you, your employer and a finance company for the purchase of a vehicle. To be eligible for this offer your employer must first have salary packaging available to their employees.
Once you have chosen a vehicle you then enter into a finance agreement in your own name then you, your employer and finance company will all sign a novation agreement. Your employer will then make monthly lease payments to the lender which usually covers the running costs of the vehicle and Fringe Benefits Tax (FBT). These are deducted from your salary pre-tax meaning your income tax is calculated on your salary minus the salary packaging amount which in turn increases your net disposal income.
