Salary Packaging Calculator

How the salary packaging calculator works

Enter your yearly salary before packaging and choose your type of employer. The calculator shows your cap and, by default, fills in the full amount of general benefits and meal entertainment you can package. You can change these to the amounts you actually plan to package, and enter your packaging provider’s yearly fees.

The calculator then works out your 2026–27 income tax, low income tax offset, Medicare levy, Medicare levy surcharge (if you do not have private hospital cover) and HELP repayment (if you have a study loan), first on your full salary and then on your salary after packaging. Reportable fringe benefits are added back where the law requires. The difference, less fees, is your yearly gain, which is also shown per fortnight.

The result assumes that everything you package goes on expenses you would have paid anyway, such as your mortgage, rent or meals out. That is the fair comparison: in both cases you spend the same money on the same things, and the only difference is how much tax you pay along the way. If you package a benefit you would not otherwise have bought, your spending goes up, and the calculator’s gain overstates what you keep. The result also assumes you are an Australian resident for tax purposes for the whole year, your salary is your only income, and you package evenly across the year. If you have other income, such as rent, interest or a second job, your marginal tax rate may be higher than the calculator assumes, and the saving per packaged dollar could be larger.

The calculation, step by step

1. Find your cap. $30,000 grossed-up for PBIs and health promotion charities, $17,000 for hospitals and ambulance services. Divide by 1.8868 for the amount of benefits.
2. Work out your packaged taxable income. Salary − general benefits − meal entertainment.
3. Work out reportable fringe benefits. General benefits × 1.8868. Meal entertainment is not reportable.
4. Work out tax both ways. Income tax less LITO, plus the Medicare levy, on taxable income; the surcharge on taxable income plus reportable fringe benefits; HELP on repayment income, which includes reportable fringe benefits.
5. Subtract. Tax without packaging − tax with packaging = tax saved.
6. Take off fees. Tax saved − yearly fees = your gain.

Salary packaging caps for 2026–27

Caps apply per employee for each FBT year, which runs from 1 April to 31 March. These apply to the FBT year ending 31 March 2027.

Yearly gain at different salaries

From the calculator’s engine, with $260 of yearly fees, private hospital cover and no HELP debt. Hospital figures include the full meal entertainment cap; PBI figures do not.

The gain is a little higher at $70,000 than at $85,000 because packaging brings taxable income back into the range where the low income tax offset applies. From about $85,000 to $135,000 the gain is flat, because every packaged dollar saves 30% tax plus the 2% Medicare levy. Above $135,000 the 37% rate applies to more of the packaged amount, so the gain rises again. These figures assume no HELP debt; with one, the gain is lower.

How it works in plain English

Some not-for-profit employers do not pay fringe benefits tax on benefits they give their staff, up to a cap. That lets them pay some of your expenses from your salary before tax is taken out. You still spend the same money on the same things, but because your taxable income is lower, you pay less tax and keep more.

The saving is not unlimited. The caps limit how much you can package, the benefits are reported on your income statement and count for some income tests, and packaging providers charge fees. The calculator brings all of these together so you can see the real gain. Sources: ATO: FBT exempt organisations, ATO: FBT rates and thresholds and ATO: Tax rates for Australian residents.

Who can salary package tax-free

The tax benefit of salary packaging comes from the employer’s exemption from fringe benefits tax. Without that exemption, the employer would have to pay FBT at 47% of the grossed-up value of the benefits, which is roughly the same as the income tax you would save, so most employers either do not offer it or pass the cost on. The exemption applies to:

• Public benevolent institutions (PBIs), which are charities whose main purpose is to relieve poverty, distress, sickness, disability or similar needs. Many disability, aged care, community health and welfare organisations are PBIs.
• Health promotion charities, whose main purpose is to promote the prevention or control of diseases in people.
• Public hospitals, not-for-profit hospitals and public ambulance services, including the staff who work for them.

Some other registered charities and not-for-profit organisations are rebatable employers. They pay FBT but receive a rebate of 47% of the FBT payable, up to a capped amount per employee. Packaging with a rebatable employer can still be worth something, but the saving is smaller and depends on how the employer passes on the FBT cost. This calculator covers PBIs, health promotion charities, hospitals and ambulance services.

Your employer can tell you which category it falls into. If you are unsure, ask payroll or your packaging provider.

What you can package

Within the general cap, most packaging programs let you use your pre-tax salary for:

• mortgage repayments on your home;
• rent paid to a landlord or agent;
• personal loan and car loan repayments;
• credit card payments;
• everyday living expenses, often through a packaging card that you use like a debit card;
• school fees, utility bills and some insurance premiums, depending on the program.

The separate meal entertainment cap covers restaurant and café meals with others, catering, and the hire of venues for functions such as weddings, birthday parties and family celebrations. It does not usually cover takeaway food eaten alone, groceries or alcohol bought from a bottle shop. Your provider will have its own list of what qualifies.

Some benefits can be packaged outside the caps because they are exempt from FBT or taxed under separate rules. Common examples include portable electronic devices used mainly for work, such as a laptop or phone, and novated leases on eligible electric cars under the electric vehicle FBT exemption. Plug-in hybrid cars generally stopped qualifying for that exemption from 1 April 2025, apart from some existing arrangements. Ask your provider which items they offer.

How the caps and gross-up work

The caps are expressed as grossed-up amounts because FBT is charged on a grossed-up value. The gross-up reflects the fact that the employee would have had to earn more than the value of the benefit in pre-tax salary to buy it with after-tax money. There are two gross-up factors:

• Type 1 (2.0802) applies where the employer can claim GST credits on the benefit.
• Type 2 (1.8868) applies where it cannot, which is the case for most packaged benefits such as rent, mortgage and loan payments.

Dividing the cap by the Type 2 factor gives the cash value of benefits you can package. For a PBI, $30,000 ÷ 1.8868 is about $15,900. For a hospital, $17,000 ÷ 1.8868 is about $9,010. For meal entertainment, $5,000 ÷ 1.8868 is about $2,650. Your provider may quote slightly different amounts depending on how they round and whether some of your benefits use the Type 1 factor.

The caps apply per employee, per employer. If you work for two eligible employers, you may be able to use a cap with each of them, as long as each arrangement is genuine. The FBT year runs from 1 April to 31 March, which is different from the income year, so a package that starts in July uses the cap for the FBT year ending the following March.

Side effects: HELP, MLS, Centrelink and more

Salary packaging reduces your taxable income, but your reportable fringe benefits are added back for several income tests. That can increase other payments or reduce entitlements:

For most people, packaging still leaves them better off. But the more of these that apply to you, the smaller the real gain. The calculator includes HELP and the Medicare levy surcharge; for Centrelink and child support, check with Services Australia.

Salary packaging with a HELP debt

From 2026–27, compulsory HELP repayments are worked out on a marginal basis: nothing below $69,528 of repayment income, then 15 cents for each dollar up to $129,717, then $9,028 plus 17 cents for each dollar up to $186,050, and 10% of total repayment income above that. Repayment income includes reportable fringe benefits.

Packaging the full PBI cap adds about $30,000 to repayment income while removing about $15,900 from taxable income, so repayment income rises by about $14,100. At 15 cents in the dollar, that is about $2,115 more in HELP repayments, which is what happened in Scenario B. For hospital staff, the hospital cap adds about $17,000 and removes about $9,010, so repayment income rises by about $7,990, or about $1,200 more in repayments.

Extra HELP repayments are not wasted: they pay off your debt sooner, and every dollar repaid is a dollar less that is indexed in future years. But they do reduce your cash in hand. The calculator shows the gain after the extra HELP repayment, so you can see the cash effect.

Packaging and the Medicare levy surcharge

The Medicare levy surcharge uses income for MLS purposes, which includes reportable fringe benefits. For 2026–27, a single person without private hospital cover pays the surcharge if their income for MLS purposes is over $105,000. Packaging the full hospital cap adds about $7,990 to income for MLS purposes, and the full PBI cap adds about $14,100.

That means someone on a salary of about $97,000 to $105,000 at a hospital, or about $91,000 to $105,000 at a PBI, who does not have hospital cover can be pushed over the threshold by packaging. Once over, the surcharge applies to their whole taxable income and reportable fringe benefits at 1% or more. Scenario C shows the effect. Taking out appropriate hospital cover avoids the surcharge entirely. Our Medicare levy surcharge calculator shows your exact position.

How to start salary packaging

1. Check you are eligible. Ask payroll whether your employer offers salary packaging and which provider it uses.
2. Read the provider’s guide. Look at the benefits offered, the fees, and the rules for changing or stopping your package.
3. Run the numbers. Use this calculator with your salary, HELP status and hospital cover, and the provider’s fees.
4. Sign the agreement before the pay you want to package. Salary packaging must be agreed before you earn the salary. You cannot package pay you have already earned.
5. Set up your benefits. For example, give the provider your mortgage or rent details, or activate a packaging card.
6. Check your payslips. Your payslip should show the packaged amount deducted before tax, and your income statement at the end of the year should show your reportable fringe benefits.

Changing jobs, leave and the end of the FBT year

Changing jobs. If you leave an eligible employer, your package normally stops on your last day. Any money sitting in your packaging account that has not yet been paid to an expense is usually paid to you as salary and taxed. Plan your final pays so you do not have a large unspent balance.

Moving between eligible employers. If you move from one hospital or charity to another, you start a new package with the new employer. The caps apply per employer, so check with both providers how much has been used in the current FBT year.

Leave without pay. If you take unpaid leave, there is no salary to package. Some providers let you package more in later pays to catch up, as long as you stay within the cap for the FBT year.

The end of the FBT year. The cap resets on 1 April. Many providers ask staff to finalise their packaging for the year by a date in March so that unused amounts can be dealt with before 31 March.

A worked example by hand

Here is the calculator’s default example. A nurse at a public hospital earns $85,000, packages the full hospital cap of $9,009.96 and $2,649.98 of meal entertainment, has private hospital cover and no HELP debt, and pays $260 a year in fees.

Without packaging: income tax on $85,000 is $4,020 + 30% × ($85,000 − $45,000) = $16,020. There is no low income tax offset at this income. Medicare levy is 2% × $85,000 = $1,700. Total: $17,720.

With packaging: taxable income is $85,000 − $9,009.96 − $2,649.98 = $73,340.06. Income tax is $4,020 + 30% × $28,340.06 = $12,522.02. Medicare levy is $1,466.80. Total: $13,988.82.

Gain: $17,720 − $13,988.82 = $3,731.18 of tax saved, less $260 of fees = $3,471.18 a year, or $133.51 a fortnight. Reportable fringe benefits are $9,009.96 × 1.8868, rounded down to $16,999. With hospital cover and no HELP debt, they do not change the result.

Salary packaging or salary sacrifice into super?

Both reduce your taxable income, but they work differently and suit different goals.

Eligible employees can do both. Many hospital and charity workers package up to their FBT cap for living expenses, then salary sacrifice extra into super if they want to save more for retirement. Because packaging within the cap is tax-free while super contributions are taxed at 15%, packaging usually gives the bigger immediate saving per dollar. Super contributions are locked away until retirement, so they suit money you will not need for many years. Our salary sacrifice calculator shows the super side.

Part-time, casual and lower-income staff

Salary packaging can still help part-time and casual staff, but the saving depends on your taxable income. Every packaged dollar saves tax at your marginal rate, so the saving per dollar is lower at lower incomes. Once packaging reduces your taxable income below $18,200, the tax-free threshold, the extra packaged amount saves no income tax. The Medicare levy also phases out at low incomes, so there may be no levy saving below about $35,000.

The low income tax offset also matters. Because it is reduced as income rises, packaging can increase the offset you receive, which adds to the saving for people with taxable incomes between $37,500 and $66,667. On the other hand, fees are a bigger share of a small saving. If your provider charges a fixed fee per pay, check that your tax saving is comfortably larger than the fee before signing up.

Casual employees should also check whether they are eligible. Some employers only offer packaging to permanent staff, or require a minimum number of hours. If you are eligible and have irregular pay, ask your provider how it handles pays where your salary is lower than your packaged amount.

Novated leases and car benefits

A novated lease is a three-way agreement between you, your employer and a finance company, where your employer makes lease and running cost payments from your salary. Novated leases are available to many employees, not just those of FBT-exempt employers, and they have their own FBT rules.

For eligible electric cars, such as battery electric vehicles below the luxury car tax threshold for fuel-efficient vehicles, the electric vehicle FBT exemption means no FBT is payable on the car benefit, which can make a novated lease very tax-effective. The exempt car benefit is still included in reportable fringe benefits, so it counts for HELP, the Medicare levy surcharge and Centrelink, just like other packaged benefits.

For petrol and diesel cars, FBT is usually managed with the statutory formula method and employee contributions from after-tax pay. How a novated lease interacts with your packaging cap depends on your employer and provider, so ask them directly. Our novated lease vs car loan calculator compares the two ways of paying for a car.

Salary packaging and your tax return

At the end of the income year, your income statement in myGov shows your gross salary after packaging, the tax withheld, and your reportable fringe benefits. Your tax return uses the salary figure, so the packaged amounts are already excluded from your taxable income. You do not need to claim them as deductions.

Reportable fringe benefits are shown separately and are pre-filled in your return. The ATO uses them to work out your HELP repayment, Medicare levy surcharge and private health insurance rebate, and Services Australia uses them for family payments. Because the FBT year ends on 31 March and the income year on 30 June, the reportable fringe benefits on your income statement for one income year relate to the FBT year that ended in March of that income year.

If you have a HELP debt, PAYG withholding during the year may not include enough for the extra repayment caused by your reportable fringe benefits, so you may have a tax bill or a smaller refund at the end of the year. You can ask your employer to withhold more, or set aside some of your packaging saving each fortnight. The calculator’s HELP figure shows roughly how much to set aside.

Questions to ask your packaging provider

• What are all the fees, including setup, per-pay, card and transaction fees, and are any charged as a percentage?
• Which benefits can I package, and how quickly are payments made to my lender or landlord?
• How do you handle the cap if I start part way through the FBT year?
• What happens to any unspent balance at the end of the FBT year or if I leave?
• How do I change or stop my package, and how much notice do you need?
• Is my super calculated on my salary before or after packaging?
• Do you offer meal entertainment and venue hire, and what counts?

The answers can make a real difference. A provider that charges a percentage of the amount packaged may cost much more than one that charges a flat fee, and slow payments can mean missed due dates on loans or rent.

What a packaged fortnight looks like

It helps to see salary packaging as cash flow. Take the calculator’s default nurse on $85,000 a year who packages the full hospital cap and meal entertainment. Spread over 26 fortnights, that is about $346.54 of general benefits and $101.92 of meal entertainment each fortnight.

The cash that reaches your bank account is lower with packaging, because part of your pay goes straight to your mortgage and meal entertainment card. But because you no longer pay those expenses yourself, you are left with about $133.51 more each fortnight, which matches the calculator’s result. Actual pay-by-pay tax withholding uses the ATO tax tables, so your payslip may differ slightly from the yearly average shown here.

Salary packaging by occupation

Nurses and midwives in public hospitals are among the largest groups of salary packagers in Australia. They usually have access to the hospital cap of about $9,010 plus meal entertainment. Because many nurses earn in the 30% tax bracket, the saving is typically around $3,000 to $3,500 a year after fees, depending on fees, HELP debts and hospital cover.

Doctors in public hospitals have the same cap, but because their marginal tax rate is often 37% or 45%, each packaged dollar saves more tax. Higher earners are also more likely to be over the Medicare levy surcharge threshold already, so packaging does not usually change their surcharge position, though most hold hospital cover anyway.

Paramedics employed by public ambulance services use the same $17,000 grossed-up cap as hospital staff.

Disability support workers, aged care workers and community services staff employed by PBIs have the larger $30,000 grossed-up cap, worth about $15,900 of benefits. Because many of these roles are paid in the 15% to 30% brackets, the saving per dollar is lower than for higher earners, but the larger cap makes up for it, as the table above shows.

Staff of not-for-profit private hospitals can usually package under the hospital cap. Staff of for-profit private hospitals generally cannot, because their employer is not FBT-exempt. Check your employer’s status with payroll.

The rules that make packaging legitimate

Salary packaging is a long-standing, legal arrangement that the ATO recognises, as long as it follows a few rules. The most important is that the agreement must be made before you earn the salary. You can agree to package future pay, but you cannot go back and package pay you have already earned, because that would just be a change in how you describe income you already have.

The benefits must also be genuine. Payments must go to real expenses in your name, such as your own mortgage or rent, and the packaging provider keeps records to show this. Meal entertainment must be genuine entertainment, not groceries. If a benefit does not meet the rules, the employer may have to pay FBT on it, and the cost is usually passed on to you.

Finally, the total must stay within the cap for each FBT year. Providers track this for you, but if you have packaging with more than one eligible employer, or you change jobs during the year, keep your own record of what you have used.

Rebatable employers in more detail

Registered charities that are not PBIs or health promotion charities, and some other not-for-profit bodies such as certain sporting, religious, scientific and community organisations, can be rebatable employers. They pay FBT on benefits, but receive a rebate of 47% of the FBT payable on benefits up to a $30,000 grossed-up cap per employee. In practice, the employer pays about half the FBT it would otherwise pay.

Whether you benefit depends on how your employer handles that remaining FBT cost. Some absorb it, some pass it on, and some offer only selected benefits. The tax saving is usually much smaller than with an exempt employer, so ask your employer or provider for an example before you sign up. Ask them to show the FBT cost, the fees and your expected tax saving side by side, in dollars for a full year.

Common salary packaging mistakes

1. Forgetting about HELP. Reportable fringe benefits can increase compulsory repayments.
2. Crossing the MLS threshold without hospital cover. Packaging can trigger the surcharge.
3. Leaving cap unused. Unused cap does not carry over past 31 March.
4. Going over the cap. Excess benefits attract FBT, usually passed back to you.
5. Packaging meals you would not otherwise buy. The tax saving is smaller than the extra spending.
6. Ignoring Centrelink. Family payments and child care subsidy use income that includes reportable fringe benefits.

Glossary

• Salary packaging: an agreement to receive part of your salary as benefits paid from your pre-tax pay.
• Fringe benefits tax (FBT): a tax paid by employers on certain non-cash benefits given to employees, at 47% of the grossed-up value.
• FBT year: 1 April to 31 March.
• Grossed-up value: the value of a benefit multiplied by a gross-up factor, 1.8868 (Type 2) or 2.0802 (Type 1).
• Exemption cap: the grossed-up value of benefits an exempt employer can provide each employee without FBT.
• Reportable fringe benefits: the grossed-up value of fringe benefits over $2,000, shown on your income statement.
• Meal entertainment: food, drink and venue hire for entertainment, which has its own separate cap and is not reportable.
• Packaging provider: a company that manages salary packaging on behalf of employers.
• Public benevolent institution (PBI): a charity whose main purpose is to relieve poverty, distress, sickness or disability.

How we tested this calculator

The calculator assumes an Australian resident for the full year, with salary as the only income. It does not include rebatable employers, novated leases, Centrelink effects, or employer-specific rules on super.

Three real Australian examples

All figures come from this calculator’s engine, using 2026–27 rates.

Three expert tips

Salary packaging FAQs

Definitions and eligibility

Maths and technical rules

State and territory differences

Edge cases and ATO compliance

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Editorial transparency and sources

We check the tax rates, Medicare levy, MLS and HELP thresholds, and FBT caps on this page against the ATO each year and whenever they change. The page was last checked on 29 October 2026. Read our editorial policy and report errors on our contact page.

General Advice Warning: this calculator and page provide general information for educational purposes only. They do not take into account your objectives, financial situation or needs and are not tax or financial advice. Your employer and packaging provider decide which benefits and fees apply. Speak to your provider or a registered tax agent before acting. AUFinanceCalculators.com does not hold an Australian Financial Services Licence and is not a registered tax agent. See our full disclaimer.

Official sources

• Australian Taxation Office: FBT exempt organisations
• Australian Taxation Office: FBT rates and thresholds for 2026
• Australian Taxation Office: Tax rates for Australian residents
• Australian Taxation Office: Study and training loan repayment thresholds and rates
• Australian Taxation Office: Medicare levy surcharge thresholds and rates