Salary packaging for not-for-profit and health workers
If you work for a public or not-for-profit hospital, ambulance service or charity, you can package living expenses tax-free. Here is how it works — and the HECS catch most people miss.
Salary packaging is one of the most generous perks in the Australian tax system, and it is reserved almost entirely for the not-for-profit and health sectors. If you work for an eligible employer, you can pay for everyday expenses with pre-tax dollars — cutting your tax bill by thousands. Here is how it works in 2026-27.
Who is eligible
The tax-free caps depend on your employer type. Employees of registered charities and public benevolent institutions (and health-promotion charities) can package up to $15,900 a year. Employees of public and not-for-profit hospitals and ambulance services can package up to $9,010. On top of either cap, you can package a further $2,650 for meal entertainment. Private-sector employees generally miss out.
How it saves you tax
The packaged amount comes out of your salary before tax, lowering your taxable income. Because you would otherwise pay tax on that money at your marginal rate, the saving is the tax you avoid — often 30% or more of the packaged amount.
Worked example
Emma is a nurse at a public hospital earning $85,000. She packages the full $9,010 of living expenses. That $9,010 is no longer taxed at her 32% marginal rate (30% plus Medicare), saving her about $2,883 a year — money that would otherwise have gone to the ATO, now covering her rent and groceries instead.
The HECS catch
Here is the part most calculators ignore: the packaged amount is a reportable fringe benefit. It gets grossed up (by a factor of 1.8868) and added to your income for some tests — including your HELP/HECS repayment income. So if you have a study debt, packaging can lift your compulsory repayment, clawing back part of the benefit. It is still usually worth it, but the net gain is smaller than the headline tax saving suggests.
See your packaging benefit
Model your real benefit — including the reportable-benefit effect on HECS that other calculators skip.
This is general information, not personal advice. Your employer's salary packaging provider administers the arrangement and sets the eligible expenses. See also our guide to salary sacrificing into super.
Frequently asked questions
How much can I salary package tax-free?
Up to $15,900 a year if you work for a registered charity or public benevolent institution, or $9,010 if you work for a public or not-for-profit hospital or ambulance service — plus an extra $2,650 for meal entertainment.
Does salary packaging affect my HECS?
Yes. The packaged amount is a reportable fringe benefit, grossed up by 1.8868 and added to your HELP repayment income. So while it cuts your income tax, it can raise your compulsory HECS repayment — worth modelling before you decide how much to package.
What can I package?
Typically everyday living costs like rent or mortgage, utilities, groceries and insurance, plus a separate meal entertainment benefit. Your employer's salary packaging provider sets the exact list.
Is salary packaging worth it if I have a HECS debt?
Usually yes — the income tax saving generally outweighs the extra HECS repayment — but the net benefit is smaller than the headline figure. Our calculator shows the after-HECS result so you can see the real number.