You may have thought every year about how your taxes affect your pay, and a salary packaging Australia guide can help you understand your options. The government does provide employers a way to enter into an agreement with their employees to restructure their salary. It’s called salary packaging. By using pre-tax salary to pay for non-cash benefits, you may reduce your taxable income. For example, QLD Health salary packaging may allow eligible employees to allocate part of their pre-tax income towards approved living expenses. But the benefits will depend on your employer and the ATO’s rules and may affect issues like HECS-HELP repayments.
We put this guide together to give you general information on salary packaging that you can assess with help from a registered tax agent.
Key takeaways
- Salary packaging may provide tax benefits under specific circumstances, depending on your individual situation.
- Fringe benefits tax may apply to certain expenses.
- Queensland Health workers may be able to access tax-free caps for salary packaging.
- Specific charitable organisations may have access to higher tax-free caps.
- Health workers may be able to salary package a range of expenses across different areas.
- Case studies show potential savings health workers may receive.
- Here's the step-by-step guide to using FAA's salary packaging services.
- FAA may assist you with assessing your salary packaging options.
What healthcare employees need to know about salary packaging Australia guide
A salary packaging arrangement, also known as total remuneration packaging, may allow an employee to use pre-tax income to pay for some everyday costs. What potential benefits might that arrangement provide someone? By allocating a portion of your income to approved expenses before tax is applied, you may reduce your taxable income in some circumstances. This may affect your take-home pay depending on your individual tax position and your employer’s program. However, this can also affect other obligations like HECS-HELP. The benefits of salary packaging depend on the details of your employment and whether your employer offers the arrangement.
Fringe benefits tax (FBT)
Fringe Benefits Tax FBT is a standard part of salary packaging in Australia and is managed by employers within the packaging arrangement.
In many cases, particularly within the health and not for profit sectors, employees can access salary packaging benefits under FBT concessions or exemptions. This allows eligible employees to maximise the value of their salary package.
Common benefits covered under FBT rules include:
• Novated leasing
• Gym memberships
• School fees
• Car parking
• Discounted employee loans
FBT is handled at the employer level, meaning employees typically do not need to calculate or manage this tax themselves. A salary packaging provider can assist in structuring benefits in a compliant and tax effective manner.
Certain expenses are exempt from Fringe Benefits Tax FBT when provided under approved conditions.
Examples of commonly FBT exempt benefits include:
• Portable electronic devices
• Briefcases
• Superannuation contributions
• Protective clothing
• Tools of trade
Tax-free caps for government employees in healthcare
Healthcare workers may be able to salary package specific expenses up to the following caps (which are subject to change), as of 2026:
• $9010 for living costs, such as:
✔️ Mortgage repayments
✔️ Rent
✔️ Personal loan repayments
✔️ Groceries
✔️ Utility bills
• $2650 for meal entertainment, such as:
✔️ Restaurant dining
✔️ Catering hire
✔️ Gala or charity dinner attendance
✔️ Taxi fares to and from a restaurant
Eligible expenses within these caps don’t trigger FBT. The caps apply to the FBT year, which runs from 1 April to 31 March of the following year.
Note: Salary packaging is subject to Australian tax law. Speak with your employer and a registered tax agent to understand your salary packaging options.
Salary packaging for NSW Health employees
NSW Health employees may also be eligible for salary packaging. The general living expenses cap is $9,009 per FBT year, plus $2,650 for meal entertainment. Additional benefits such as novated leasing, remote area housing, and relocation expenses may also be available depending on your employer’s policy.
One key difference for NSW Health employees is the share of savings arrangement. In most cases, tax savings from salary packaging are split 50/50 between the employee and employer. Eligible HSU award employees may receive a higher share. Check with your employer or a registered tax agent to understand how this applies to you.
Disclaimer: FAA consultants provide general information only. This does not constitute personal financial or tax advice. Speak with a registered tax agent for tax advice. For personal financial advice, speak with an authorised representative of Lifespan Financial Planning Pty Ltd (AFSL 229892).
PBI and HPC status
The government wants to encourage legitimate charitable organisations. The ATO is kind enough to provide certain charitable statuses with a higher tax-free cap. Certain not-for-profit organisations may be considered a Public Benevolent Institution (PBI) or a Health Promotion Charity (HPC). Which organisations receive these statuses?
PBI
A charity whose main purpose is to provide relief for issues such as poverty or illness. These are organisations that typically provide direct care to their clients. For example, PBIs may include charities such as:
✓ Certain not-for-profit hospitals.
✓ Disability services providers.
✓ Aged care providers.
HPC
A charity that focuses on initiatives designed to prevent or control human diseases. They aren’t involved so much in direct provision of care. They’re focused more on education and advocacy. You could think of examples, such as:
✓ Heart Foundation.
✓ Cancer Council.
✓ Beyond Blue.
Charities of these subtypes may access a tax-free living expenses cap of $15,900.
Disclaimer: FAA consultants provide general information only. Tax laws are subject to change. Refer to the Australian Taxation Office’s (ATO) guidance. Speak with a registered tax agent for tax advice.
Who Is Eligible for Health Salary Packaging
Most employees may be able to access health salary packaging, as long as it’s offered by their employer. This includes:
• Full-time employees.
• Part-time employees.
• Casual employees.
If you have more than one job, you may be able to salary package in both workplaces, depending on the terms of your employment.
Who isn't eligible?
Employers aren’t automatically required to offer salary packaging arrangements. If your employer chooses not to offer it as a workplace benefit, you’ll be ineligible. An employer may also restrict certain benefits from being packaged.
An employer may not offer salary packaging to particular employees. For example, a business may decide not to offer it to casual employees who:
Have worked for the business for less than a year.
Are not expected to continue their employment for another 12 months.
What benefits you can include in the arrangement
There are many expenses that may be part of a healthcare salary packaging arrangement. How salary packaging may work for you depends on your agreement with your employer. The expenses you might consider include:
Meal Entertainment and Venue Hire ($2,650 per year)
• Restaurant meals and takeaway
• Café dining and coffee
• Food delivery services
• Catering for private events
Entertainment Benefits ($2,650 per year)
• Concert and theatre tickets
• Cinema tickets
• Sporting events
• Theme parks
• Streaming services
Living Expenses ($9,010 total cap includes above)
• Mortgage or rent payments
• Utility bills
• Insurance premiums
• School fees and childcare
• Gym memberships
• Professional association fees
• Self-education expenses
Novated Car Leasing
Disclaimer: Credit assistance for novated leasing is provided by FAA Group under its Australian Credit Licence (ACL 388789). For personal financial advice, you may speak with an authorised representative of Lifespan Financial Planning Pty Ltd (AFSL 229892). FAA consultants only provide general information.
Novated leases are a common salary packaging arrangement. In a novated lease arrangement, payments and running expenses may be covered by your pre-tax salary. This will depend on your employer’s program and the nature of the lease. Running expenses could include:
• Fuel
• Car maintenance
• Radiator coolant
• Car detailing
• Roadside assistance
• Car insurance
FAA assists with salary packaging administration. Our team doesn’t provide financial advice but can provide general information.
Reportable fringe benefits
Employers must report an employee’s reportable fringe benefit amount to the ATO if it exceeds $2000 in an FBT year. This is grossed up to reflect the pre-tax income you’d need to earn to purchase the benefits yourself at the highest marginal tax rate.
Certain benefits aren’t reportable, including:
Remote area housing assistance.
Benefits that ensure the employee’s security and safety during their job.
Travel expenses for a remote area worker visiting a major population centre.
Salary sacrifice and superannuation (general information)
Disclaimer: FAA consultants provide general information only. For personal advice on superannuation, you may speak with an authorised representative of Lifespan Financial Planning Pty Ltd (AFSL 229892). Seek advice from a registered tax agent.
Salary sacrificing can involve using pre-tax salary for additional superannuation contributions. Employers are required to pay their employees super guarantee (SG) when certain criteria are met. Here’s when super guarantee entitlements apply:
• Before 1 July 2022, workers earning less than $450 per month didn’t receive SG payments. Now, employees get SG if they’re getting paid any amount. What they earn doesn’t affect whether SG applies.
• SG generally applies to various jobs and employment types, including:
✔️ Casual, part-time, and full-time workers.
✔️ Workers who are temporary residents.
✔️ A family member working for the business.
• Workers over 18 years receive SG no matter how many hours they work. Employees under 18 must work over 30 hours in a week to get SG.
• SG is calculated on an employee’s ordinary time earnings (OTE). OTE is how much an employee gets paid for their ordinary hours of work.
• The rate paid to eligible employees is currently 12%. This rate may change. The ATO will have the most up-to-date rate.
How entering a salary sacrifice arrangement affects super guarantees
According to the ATO, an ‘effective salary sacrifice arrangement’ must meet these criteria:
• The employer and employee make the arrangement before the work is performed.
• The arrangement had to have been organised by agreement. You may renegotiate at a later time.
• The employee can’t have access to sacrificed salary.
Salary sacrificing for employees does not:
• Change the OTE an employer has to calculate an employee’s SG on.
• Change the amount of SG contributions an employer must make.
Salary sacrificing doesn’t change an employer’s SG obligations. They’re considered to be employer contributions, not the employee’s personal contributions.
Does salary sacrificing affect tax implications?
Contributions made to a compliant superannuation fund aren’t treated as assessable income by the ATO. However, they are part of your reportable super contributions. This means that they must be included in your tax return.
How does healthcare salary packaging work for you
Here’s a common question: How will salary packaging affect my take-home pay? We can’t provide information for your specific situation. There are a lot of factors that go into how salary packaging influences your tax burden. However, you may be able to get a general idea of how salary packaging may work in some scenarios. First, we need to discuss a matter that affects millions of Australians: student debt.
HECS-HELP debt implications
The Australian government may offer some financial support to certain students. If you’ve been through higher education, or are planning to, you’ve likely heard of HECS-HELP. As you can probably gather from the acronym, there are two parts:
• Higher Education Contribution Scheme (HECS).
• Higher Education Loan Program (HELP). This is the broader initiative that contains HECS.
The government may be prepared to cover a portion of a student’s tuition fees. But it expects the student to contribute. A HECS-HELP loan covers an eligible student’s contribution. Students with a HECS-HELP debt must make repayments once certain conditions are met. These are the ATO-published thresholds and repayment rates for 2025-26, sourced from the ATO in December 2025:
| $0 – $67,000 | Nil |
|---|---|
|
$67,001 – $125,000 |
15c for each $1 over $67,000 |
|
$125,001 – $179,285 |
$8,700 plus 17c for each $1 over $125,000 |
|
$179,286 and over |
10% of your total repayment income |
Note: These thresholds were sourced from the ATO in December 2025 and apply to the 2025-26 income year. Check the ATO website for the most current figures.
Your salary packaging agreement may have important implications for your HECS-HELP debt. The following sources are considered part of your income:
• Taxable income.
• Reportable fringe benefits. This applies no matter what your employer’s status is.
• Reportable superannuation contributions.
Here’s a worked example (which is illustrative only) showing how salary packaging may impact your HECS-HELP repayments in a simplified scenario.
Note: The following examples are illustrations only. They are not recommendations or advice.
Aged care support worker
• Salary: $75,000
• Top marginal tax rate: 30%
• Packaging: $15,900
• HECS-HELP debt: $35,000
The grossed-up taxable value of the packaged benefits is $30,000. The employee’s HECS-HELP repayment income may be calculated using the following steps:
• Taxable income – value of packaged benefits ($75,000-$15,900= $59,100).
• Reduced taxable income + Grossed-up reportable fringe benefits ($59,100+$30,000=$89,100).
• HECS-HELP repayment income= $89,100.
An income of $89,100 falls into the $67,001 – $125,000 bracket. This means the repayment will be 15c for every dollar over $67,000. The repayment amount is calculated as follows:
• $89,100 – $67,000= $22,100
• $22,100 x 15%= $3315
Without salary packaging, the employee’s repayment would be calculated as:
• $75,000-$67,000 = $8000
• $8000 x 15% = $1200
This simplified example shows the employee’s HECS-HELP repayment differs by $2115 based on this illustrative scenario, versus a no-packaging situation. This isn’t going to be true in every case. Illustrative examples like the one we’ve shown you can’t account for your circumstances.
Note: FAA consultants provide general information only. Financial advice is provided by authorised representatives of Lifespan Financial Planning Pty Ltd (AFSL 229892). Credit assistance is provided by FAA Group under its Australian Credit Licence (ACL 388789).
Disclaimer: The figures used in this hypothetical case study are illustrative only. They do not account for your personal circumstances. Actual results may vary. You may wish to seek advice from a licensed financial adviser and a registered tax agent. This case study does not guarantee any outcome.
Illustrative case studies (general information only)
Let’s look at some illustrative examples.
Example 1: Registered nurse
• Salary: $85,000
• Assumed marginal tax rate for this example: 30%
• Packaging: $11,660
• The tax treatment difference may be $3,730 for the year in this simplified scenario.
• This speculative annual difference amounts to $310 per month in this simplified scenario.
Example 2: Senior medical officer
• Salary: $180,000
• Assumed marginal tax rate for this example: 37%
• Packaging: $11,660
• The tax treatment difference may be $4,547 for the year in this simplified scenario.
• This speculative annual difference amounts to $379 per month in this simplified scenario.
Example 3: Allied health worker with a novated lease
• Salary: $95,000
• Assumed marginal tax rate for this example: 30%
• Packaging: $24,010 (living expenses + novated lease)
• The tax treatment difference may be $8,283 for the year in this simplified scenario.
• This speculative annual difference amounts to $690 per month in this simplified scenario.
This is illustrative, based on the assumptions shown. This is not a prediction or financial advice. Actual outcomes vary with your individual circumstances. You may want to get advice from a registered tax agent.
This is just an illustrative example. In reality, the actual results are going to vary based on your personal circumstances.
Note: These examples are general in nature and do not take into account your individual circumstances. Actual results may vary. These examples do not constitute a guarantee of outcomes.
Disclaimer: FAA consultants provide general information only. Credit assistance is provided by FAA Group under its Australian Credit Licence (ACL 388789). For personal financial advice, you may speak with an authorised representative of Lifespan Financial Planning Pty Ltd (AFSL 229892). Seek advice from a registered tax agent.
Use FAA’s free salary packaging calculator to see general estimates of potential tax impacts. The calculator provides general information only and does not constitute financial or tax advice. For advice tailored to your circumstances, consult a licensed financial adviser or registered tax agent.
Be aware of how salary packaging may affect you
Salary sacrifice affects tax, super, and government benefits in various ways. Consider what is being packaged and the costs associated with your arrangement. Salary packaging can have a range of effects on things such as:
• The Medicare levy surcharge.
• Some tax offsets.
• Child support payments.
• Certain government benefits.
FAA provides general information and administrative support. For advice on whether a salary sacrifice agreement is right for you, consult a licensed financial adviser or registered tax agent.
How FAA supports salary packaging administration for Healthcare employees
Here’s a step-by-step guide on how FAA may assist you with general information and administration of salary packaging.
Step one: Eligibility information
We’ll provide general information about salary packaging eligibility criteria for healthcare employees. For advice about your specific eligibility and circumstances, consult a licensed financial adviser or registered tax agent.
Step two: Expense categories (general information)
We provide general guidance on expense categories commonly included in salary packaging arrangements. You might think, ‘general information is good and all. But what if I want to discuss my personal situation? Consulting a licensed financial adviser or registered tax agent would be the ticket.
Step three: Application setup
We’ll work with your employer’s payroll department assist with administrative matters. Compliance with ATO requirements is influenced by your individual circumstances and current tax law. Consult a registered tax agent for tax advice.
Step four: Claim submission
You may submit receipts through our online platform or mobile app. You can access the platform whenever you like. We don’t want to make it any harder than it needs to be to keep up with claims. We focus on timely processing for a straightforward experience.
Step five: Ongoing support
We take care of administrative duties on an ongoing basis. We can help monitor your balances and provide reminders about annual caps. Payroll and ATO queries can be addressed by our team or referred to a registered tax agent as required. You can track your balance with our regular statement updates. As for how your packaging arrangement is affecting your tax position, a registered tax agent can help with calculations.
Why Healthcare employees use FAA for salary packaging administration
Our team can provide general information about salary packaging administration. Our online portal supports our services through an easy interface. It facilitates salary packaging through functions, such as:
• 24/7 access.
• A mobile app to make claims.
• Automated cap reminders.
• Digital receipt storage.
• Real-time balance tracking.
Frequently asked questions
What happens if I leave the healthcare sector?
Can my partner also salary package?
Does salary packaging impact child support?
How does salary packaging affect my disposable income?
Salary packaging won't automatically mean you pay less tax. Whether you end up with more or less income after tax depends on your employment situation and how your salary packaging arrangement is organised. If you want to compare net disposable income with and without a packaging arrangement and the tax involved, the ATO has some examples you can view here. In the ATO's own words, it compares '3 salary sacrifice scenarios'. These scenarios cover the following;
- No salary packaging.
- Salary + car (without employee contributions).
- Salary + car (with employee contributions).
Note: For advice about your specific circumstances, please consult a licensed adviser or registered tax agent.
From our clients
Disclaimer: The following feedback represents individual experiences and opinions. Results may vary, and these testimonials do not constitute a guarantee of outcome. These testimonials relate to administrative assistance and general information only. They do not constitute or imply the provision of personal financial, tax, or credit advice.
Ryan was helpful and patient during my Salary Packaging setup process. He answered my general questions. He was also email efficient, had a good phone manner and was able to respond quickly and timely via email or phone. Thanks Ryan and FAA team.
Binta
Thank you. I’m starting at a new not for profit next month I don’t know yet who they salary package with, hope it’s you guys, you’ve been good.
Lisa
Understand Your Salary Packaging Options
Many employees are curious about how health salary packaging may affect income tax. If you’re considering salary packaging, accurate information helps you understand how salary packaging may affect tax treatment within certain employer programs. The personal expenses that may be included and the tax implications are critical considerations. Example salary sacrifice scenarios may give you an idea of how packaging arrangements may play into specific financial circumstances.
Salary packaging may affect the tax treatment for eligible health workers. Using pre-tax income to cover everyday expenses may affect your tax position, depending on your individual circumstances. You may wish to consult a registered tax agent for advice. The information provided is general in nature. It does not constitute personal financial advice.
Try our free calculator for a general estimate, or contact us for general information. For personal financial advice, speak with an authorised representative of Lifespan Financial Planning Pty Ltd (AFSL 229892). Speak with a registered tax agent for tax advice.
Please note: Initial consultations cover general information only and do not constitute personalised financial or tax advice. The calculator provides general estimates only.
Explore your salary packaging options using our free estimator calculator, or contact us for general information. For advice tailored to your circumstances, we can refer you to a licensed adviser. Please note: initial consultations cover general information only and do not constitute personalised financial or tax advice. The calculator provides estimates only.
