Attract and Retain Top Talent with Salary Sacrifice: A Guide for Not-for-Profits

General

Attract and Retain Top Talent with Salary Sacrifice: A Guide for Not-for-Profits.

By offering salary sacrifice arrangements, eligible NFPs can provide employees with access to significant tax-effective benefits—without increasing salary costs. At The Breakthrough Office, we partner with specialist salary packaging providers to help Not-for-Profits implement these arrangements effectively and compliantly.

What Is Salary Sacrifice?

Salary sacrifice is an arrangement where an employee agrees to forgo part of their gross salary in return for certain benefits provided by the employer. These benefits are paid from pre-tax income, which reduces the employee’s taxable income and can significantly increase their take-home pay.

This is particularly valuable in the NFP sector, where many organisations hold Fringe Benefits Tax (FBT) exemption or FBT rebateable status. These statuses allow employees to access tax-free benefits not available in other sectors.

🧾 Not sure about your FBT status? Our team can help you determine what benefits your organisation is eligible to offer.

Why Offer Salary Sacrifice to Your Team?

Offering salary sacrifice options can make a real difference to your employee value proposition. It’s a practical way to improve staff satisfaction and financial wellbeing—without increasing your payroll costs.

🎯 Benefits for Employers:

  • Attract and retain skilled staff in a competitive sector
  • Boost staff morale and engagement
  • Offer greater value without increasing salaries
  • Support staff financial wellbeing
  • Align with sector best practice

💼 Benefits for Employees:

  • Increase take-home pay by reducing taxable income
  • Access up to $15,900 per year tax-free for general living expenses
  • Claim an additional $2,650 per year for meal entertainment and holiday accommodation
  • Option to salary sacrifice superannuation contributions and novated car leases (outside the cap)

What Can Be Salary Sacrificed?

Within the Tax-Free Cap (FBT Exempt/Rebateable Employers):

  • Rent or mortgage payments
  • Credit card repayments
  • Utility bills
  • Meal entertainment (dining out)
  • Holiday accommodation

Outside the Cap (Still Pre-Tax):

  • Superannuation contributions (up to concessional cap)
  • Novated car leases

Things to Consider Before Offering Salary Sacrifice

Salary packaging can bring significant benefits, but it’s important to manage it well. Here’s what to keep in mind:

✅ FBT Status and Cap Limits

The annual caps ($15,900 and $2,650) only apply if your organisation holds the correct FBT status. Going over these limits can result in additional tax liabilities.

✅ Packaging Provider Partnership

Most NFPs use a third-party packaging provider to manage these arrangements and ensure compliance. These providers charge administration fees, usually paid by the employee.

✅ Staff Education

Clear communication is essential. Staff need to understand how salary packaging works and how it may affect their HECS/HELP repayments, Centrelink entitlements, and superannuation.

✅ Eligibility and Internal Policies

Not all roles or staff may be eligible. We recommend reviewing internal policies and documenting your salary packaging offer as part of your employee benefits framework.

How We Can Help

At The Breakthrough Office, we work closely with trusted salary packaging providers to support Not-for-Profits:
  • Confirm their FBT eligibility
  • Connect you with a trusted partner who you feel is best suited to your organisation
  • Set up compliant systems and processes
  • Communicate benefits to staff clearly and effectively
Whether you’re just exploring the idea or ready to roll out a new salary packaging benefit, we’re here to support you every step of the way.
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