Glossary
Total Salary Package
A total remuneration package bundles your base salary, the 12% super guarantee, bonuses and benefits into one headline number. A $120,000 package inclusive of super is really about $107,143 of base salary, and that wording gap is worth real money.
What it is
A total remuneration package (TRP, also called total salary package or CTC) is the full cost of employing you, expressed as one figure. It typically combines base salary, the employer's 12% super guarantee contribution, any guaranteed or discretionary bonuses, and benefits like a car allowance, novated lease or LAFHA. Recruiters love it because the big number photographs well in an offer letter.
The trap is that two offers quoting the same $120,000 can differ by thousands depending on wording. Quoted inclusive of super, $120,000 means roughly $107,143 of base salary with $12,857 going to your fund; quoted as salary plus super, it means $120,000 base and $14,400 of super on top. That single line of wording is worth around $4,800 a year in take-home terms. Always ask which framing applies before comparing anything, because the ATO taxes the two structures differently and lenders assess them differently too.
Key takeaways
- TRP equals base salary plus 12% super guarantee plus bonuses plus benefits like allowances or novated leases.
- A $120,000 package inclusive of super is roughly $107,143 of base salary before any tax is applied.
- The same $120,000 quoted as salary plus super is worth about $4,800 more a year in take-home terms.
- Super-inclusive versus super-plus is the single most misread line in Australian offer letters.
- Guaranteed bonuses count toward lending assessments; discretionary ones usually do not, per most lender policies.
How it works
Start with the headline package and unpack it in layers. If the offer says super-inclusive, divide by 1.12 to find the base salary: $120,000 divided by 1.12 is about $107,143, and the remaining $12,857 is the employer super contribution paid to your fund. PAYG tax and the Medicare levy are then calculated on the base salary only, because super is taxed separately at 15% inside the fund. Bonuses sit on top, taxed at marginal rates in the year they are paid, as ato.gov.au guidance confirms. Loadings and allowances inside the package get the ordinary-time-earnings treatment unless the contract says otherwise.
Benefits add their own wrinkles. A $15,000 car allowance is simply extra taxable salary, while a novated lease repackages salary into a car plus fringe benefits tax, often reducing taxable income. LAFHA (living-away-from-home allowance) has concessional treatment under specific ATO rules. For lending, banks typically count base and guaranteed income at full value but shade discretionary bonuses, sometimes to 80% or less of face value. Never compare a package-inclusive offer to a salary-plus-super one from memory; the payslip base is what every entitlement is built on.
Why it matters
Comparing offers by headline package is how people accept a pay cut while celebrating a raise. Super-inclusive packaging can quietly convert a nominal $10,000 increase into barely $4,000 of extra base salary. Until you unpack the layers, you do not know what you actually signed, and neither does your budget.
A colleague named Brent (yes, that Brent) jumped ship for a $125,000 package, up from $118,000 salary-plus-super, and announced his raise at Friday drinks. His new base was $111,607 after the 12% super was carved out, versus his old base of $118,000. He had enthusiastically accepted a $6,393 pay cut, and the drinks, characteristically, were on him.
The highest-leverage thing most Australians can do is demand the base salary figure in writing before negotiating anything else. Run both framings through the employee cost to company calculator to see the true structure, and convert the base to weekly reality with the salary converter. Fair Work at fairwork.gov.au confirms super sits on top of minimum award rates, so inclusive packaging of award wages deserves extra scrutiny.
Real-world examples
1. $120,000 quoted as package-inclusive versus salary-plus-super
Inclusive of 12% super, $120,000 unpacks to about $107,143 base plus $12,857 super. Tax and Medicare on that base run roughly $27,100, leaving take-home near $3,080 a fortnight. The same $120,000 quoted as salary plus super delivers about $3,265 a fortnight instead, with $14,400 going to super. The wording difference alone is worth around $4,800 a year of spendable cash, which is why reading the offer letter twice is not paranoia.
2. Unpacking a $95,000 package with a $10,000 car allowance
A $95,000 package builds as roughly $76,000 base salary, $9,120 super guarantee and a $10,000 car allowance, rounded. The allowance is ordinary taxable income, so taxable income is about $86,000, with tax and Medicare near $19,400. Take-home lands around $2,560 a fortnight. The allowance feels like a benefit but behaves like salary: it boosts tax, lifts HECS-HELP repayments, and counts fully toward most lending assessments.
3. Guaranteed versus discretionary $15,000 bonus on a $110,000 base
Two workers each hold a $110,000 base plus 12% super and a $15,000 annual bonus. Worker A holds it guaranteed in the contract; Worker B holds it discretionary. Both pay the same tax, roughly $11,000 withheld from the bonus at marginal rates. The lender is the difference: Worker A may have $125,000 assessed as income for borrowing, while Worker B sees the bonus shaded to around $12,000 or excluded entirely, moving borrowing power by roughly $15,000 or more.
Common mistakes
Mistake: Comparing a package-inclusive offer against a salary-plus-super job without converting.
Why it bites you: On a $120,000 headline, the framing gap is about $12,857 of base salary and roughly $4,800 a year of take-home pay. Brent accepted an effective $6,393 cut and bought celebratory drinks.
Mistake: Assuming the super inside a package is bonus money on top of salary.
Why it bites you: Inclusive packaging carves the 12% out of the headline number, not in addition to it. Budgeting on $120,000 when the base is $107,143 overshoots reality by roughly $250 of taxable income every week.
Mistake: Treating a discretionary bonus as guaranteed income for a loan application.
Why it bites you: Lenders commonly shade discretionary bonuses to 80% or exclude them entirely, so a $15,000 bonus may add $12,000 or nothing to assessed income. Buyers who banked on the full amount face a borrowing shortfall at the worst possible moment.
Mistake: Ignoring the separate tax treatment of allowances and LAFHA.
Why it bites you: A $10,000 car allowance is fully taxable, trimming its real value to about $6,800 at a 32% marginal rate. Assuming it arrives intact is a $3,200-a-year budgeting error that repeats every payslip.
Ivy's take
I ran the numbers through nine offer-letter scenarios so you don't have to, and the inclusive-versus-plus wording moved more money than every other line combined. Packages are marketing documents wearing a payslip costume. The recruiter quotes the biggest defensible number, and the defensibility lives entirely in one preposition. Ask for the base salary in writing, always, before discussing anything else.
Bonuses deserve the same suspicion. Guaranteed is income; discretionary is a weather forecast, pleasant when it arrives and ruinous when budgeted. Lenders know this, which is why they shade it, and you should borrow their scepticism. Brent reads package numbers the way he reads horoscopes, with great optimism and zero verification. Unpack the layers first, then decide whether to celebrate.
Related jargon, defined
- Base salary
- Your fixed pay before super, bonuses and benefits are added on top.
- Super guarantee
- The 12% employer contribution paid into your super fund on your ordinary earnings.
- Car allowance
- A fixed taxable cash payment for vehicle costs, treated as ordinary salary.
- Novated lease
- A salary-packaged car arrangement with fringe benefits tax implications.
- LAFHA
- Living-away-from-home allowance, with concessional tax treatment under strict ATO rules.
- Discretionary bonus
- A non-guaranteed payment that lenders typically discount when assessing borrowing.
Frequently asked questions
Is a $120,000 package the same as a $120,000 salary?+
Almost never. A package usually includes the 12% super guarantee, so the base salary is roughly $107,143, while a salary-plus-super offer means $120,000 base plus $14,400 of super.
How do I convert a package figure into base salary?+
Divide the inclusive package by 1.12 to strip out the 12% super guarantee. For $120,000, that gives about $107,143, which is the figure tax and your budget actually run on.
Does super inside a package get taxed like salary?+
No. Employer super contributions are taxed at 15% inside the fund rather than at your marginal rate, and income tax is calculated only on the base salary portion.
Do banks count my bonus when I apply for a home loan?+
Guaranteed bonuses usually count at face value, but discretionary ones are typically shaded to 80% or excluded. Check your lender's policy before factoring a bonus into borrowing plans.
Which is better, a car allowance or a novated lease?+
An allowance is simple taxable cash, while a novated lease repackages salary and attracts fringe benefits tax, often cutting taxable income. The winner depends on your marginal rate and kilometres, so run both structures before signing.
Disclaimer: This information is general in nature and does not constitute financial or legal advice. Always consult a qualified professional for your specific situation.
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Ivy Sinclair-Wren
Financial Chaos Analyst
Ivy Sinclair-Wren is a Financial Chaos Analyst covering investing, AI, wealth psychology, and the emotional consequences of opening finance apps during market crashes. Based in Melbourne, she specializes in demystifying the Australian tax code and helping users navigate the intersection of spreadsheet logic and human irrationality.