Employers are being encouraged to rethink how they reward and support their staff as ongoing cost-of-living pressures drive a shift in employee expectations.

Persistent inflation, volatile fuel prices and three Reserve Bank interest rate increases in the first half of 2026 have intensified financial pressures for many households. 

As a result, businesses are increasingly looking beyond traditional pay rises to deliver benefits that provide meaningful day-to-day support and help attract and retain talent.

Employees are looking for ways to stretch their pay further, with less than one in five professionals believing their salary is keeping up with inflation. 

Craig Adamson from Australia’s leading salary packaging provider, Smart, says now is the perfect time to look at other options to help employees get more value from their take home pay and stretch their budgets further.

“Employers should be considering what benefits they can provide that might help their employees reduce everyday expenses to help them manage this cost of living crunch,” says Mr Adamson, Smart’s General Manager, Salary Packaging Customer and Client Engagement.

“We’re seeing growing demand for solutions that provide real financial relief to workers without incurring additional cost for employers and salary packaging is one of those options.” 

Salary packaging is a way for employees to pay for certain expenses, such as the costs of owning and running a car, by using pre-tax income to reduce their taxable salary. There is also a GST saving on upfront and running costs when purchasing a car via a novated lease.

In addition, some employees - including those in the charity and healthcare sectors - may be eligible to salary package a portion of their everyday living expenses like their rent or mortgage payments, groceries, dining or takeaway meals.

“Salary packaging gives employers a way to support their people without having to increase their base salary, whilst for employees it reduces their taxable income, which can act like a pay rise for some,” Mr Adamson says.

“For example, salary packaging a car through a novated lease allows employees to pay for the vehicle and associated running costs, like fuel or charging, through their pre-tax income.”

Novated leases are also a cost-effective way to transition into an electric vehicle (EV) and break free from rising fuel costs. In April this year, more than 15,000 EVs were sold in Australia, according to VFACTS data, accounting for a record 16.4% share of all new vehicle sales for the month. 

“We are definitely seeing more people wanting to move from petrol and diesel powered cars into EVs as a way to save money,” Mr Adamson says.

“One of the easiest ways to get into an EV is through novated leasing, where there’s a significant tax saving for the driver, and there’s no additional cost incurred by their employer for Fringe Benefits Tax.”

The government’s Electric Car Discount (ECD) policy provides significant additional savings on eligible EVs valued up to $91,387 with 100% of the lease and car costs able to be paid from pre-tax income without incurring fringe benefits tax (FBT). The Treasurer recently announced that the current policy would continue with no changes until the end of March 2027, with the 100% FBT exemption to then remain on vehicles up to $75,000 until March 2029. 

“There’s growing demand for solutions that provide real, day-to-day financial relief. Salary packaging and novated leasing are an important part of that conversation,” Mr Adamson says.

Smart

SmartTM is Australia’s leading salary packaging and novated leasing provider. Smart helps people keep more of what they earn. Smart works with around 3,300 employers across the government, health, education, charity and corporate sectors who collectively employ 2.5 million people. Our teams combine specialist expertise with simple digital tools and a customer-first mindset to deliver clear financial benefits and service people can trust. Other Smart companies include Smartfleet, Autopia and AccessPay. 

https://www.smart.com.au/