Australia · 2026-27 rules · checked 22 October 2026
How much does salary packaging save? The tax saving on $9,010 of living costs is $2,883 a year. The number that matters is what you are better off by once everything else is counted: $2,642 for a nurse on $85,000 with a partner and two children. A single person on $100,000 with no private hospital cover is $1,562 better off, because the Medicare levy surcharge takes part of the saving back.
Put in who pays your wages, your pay, what you package and your household. You get the tax saving, then what the amount on your income statement does to the Medicare levy surcharge, HELP, Family Tax Benefit, child care subsidy and child support.
What you enter stays in your browser. It's an estimate, not advice: your employer's rules can be narrower than the law, and your provider's fee is yours to check.
This works out salary packaging. To see it with tax, Family Tax Benefit, child care, child support and Parenting Payment together, see the Net Income Modeller →
The tax saving is the first number, not the last. You still pay the bills either way. Paying them through packaging leaves you better off by the tax you would have paid on that money, less the provider's fee, less anything your income statement sets off somewhere else: the Medicare levy surcharge, HELP, child support and, outside hospitals and charities, Family Tax Benefit and child care subsidy.
Your employer pays some of your bills from your pay before tax, up to a cap. You are taxed on what is left. You still pay the same bills, so the saving is the tax you would have paid on that money.
For someone whose top rate is 30% plus the 2% Medicare levy, $9,010 saves $2,883 (that is $9,010 × 32%). That is the figure a tax-only calculator stops at. The rest of this page is what it leaves out.
Only some employers have a cap that is free of fringe benefits tax. The caps are set on the amount grossed up, so the dollars you actually spend are lower than the headline figures of $17,000 and $30,000.
| Who pays your wages | Living costs a year | Meals and venue hire a year | Counted for Family Tax Benefit and child care subsidy |
|---|---|---|---|
| Public or not-for-profit hospital, or public ambulance service | $9,010 | $2,650 | 53% |
| Public benevolent institution or health promotion charity | $15,900 | $2,650 | 53% |
| Other not-for-profit with the 47% rebate (private school, union, religious body) | About $15,900 of spending, living costs and meals together | 100% | |
| Government department, company or other employer | No allowance for living costs | 100% | |
The $9,010 is $17,000 divided by 1.8868, the $15,900 is $30,000 divided by 1.8868, and the $2,650 is $5,000 divided by 1.8868. Meals and venue hire is a separate cap, and many employers don't allow it. If the spending includes GST that your provider claims back, the living costs cap is lower: $8,172 at a hospital and $14,421 at a charity. The cap is for each employee, each employer and each fringe benefits tax year (1 April to 31 March). What you don't use doesn't carry over.
The not-for-profits with the 47% rebate don't get an exemption. Their employer still pays about 47% of the benefit's value in fringe benefits tax, and the calculator asks whether that comes out of your package. A government department, a company or any other employer has no living costs allowance, and what can be packaged there is limited to things like work-related items and an eligible electric car. The calculator doesn't work those cases out. Our novated lease calculator covers a car.
If everything your employer provides to you in the fringe benefits tax year comes to more than $2,000, your employer reports it on your income statement. It reports the amount multiplied by 1.8868, which is what it would have been worth before fringe benefits tax. Packaging $9,010 is reported as $17,000. You are not taxed on that $17,000. Other tests add it back, and they don't all count the same share of it.
| The test | Who runs it | How much of the $17,000 counts |
|---|---|---|
| HELP repayment | Tax Office | All of it, $17,000 |
| Medicare levy surcharge | Tax Office | All of it, $17,000 |
| Child support | Services Australia | All of it, $17,000 |
| Family Tax Benefit and child care subsidy | Services Australia | 53%, $9,010, for hospital, ambulance and charity staff. All of it for everyone else |
The 53% is one minus the 47% fringe benefits tax rate, which applies until 31 March 2027. For a hospital or charity worker it works out neatly: 53% of $17,000 is $9,010, the same as came off taxable income. So family income for Family Tax Benefit and child care subsidy doesn't move. HELP, the surcharge and child support get no such help. They count the whole $17,000, which is $7,990 more than the $9,010 you took out of taxable income.
A nurse at a public hospital earns $85,000. Her partner earns $30,000. They have two children, aged 4 and 8, one in child care two days a week at $130 a day, and the family has private hospital cover. The nurse packages $9,010 of living costs and pays a $241 fee. We ran the calculator with those inputs.
| A year | Paid as normal pay | Packaged | Better or worse off |
|---|---|---|---|
| Income tax and Medicare levy | $17,720 | $14,837 | +$2,883 |
| Family Tax Benefit (you get) | $4,724 | $4,724 | no change |
| Child care, after the subsidy (you pay) | $2,439 | $2,439 | no change |
| Before the provider's fee | +$2,883 | ||
| The provider's fee | – | $241 | −$241 |
| Better off, after the fee | +$2,642 |
Where each figure comes from. Tax and Medicare levy on $85,000 is $17,720. On $75,990, which is $85,000 less the $9,010, it is $14,837. The difference is $2,883. The reported amount is $9,010 × 1.8868 = $17,000, and Services Australia counts 53% of it, $9,010. So the family's income for Family Tax Benefit and child care subsidy is $75,990 + $9,010 + $30,000 = $115,000, exactly what it was before packaging, and neither payment moves. Take off the $241 fee and $2,883 − $241 = $2,642 a year, about $102 a fortnight.
They pay the $9,010 of bills either way. Paying them through packaging leaves the family $2,642 a year better off than paying them from take-home pay. That is $2,642 ÷ $9,010 × 100 = $29.32 better off for every $100 of bills packaged.
Now a single person on $100,000 at a public hospital, with no private hospital cover. The cap, the $9,010 and the tax saving are the same, and a tax-only calculator shows $2,883 for both people. This is what the calculator shows once the surcharge is counted.
| A year | Paid as normal pay | Packaged | Better or worse off |
|---|---|---|---|
| Income tax and Medicare levy | $22,520 | $19,637 | +$2,883 |
| Medicare levy surcharge | $0 | $1,080 | −$1,080 |
| Before the provider's fee | +$1,803 | ||
| The provider's fee | – | $241 | −$241 |
| Better off, after the fee | +$1,562 |
Without packaging, the income for the surcharge is $100,000, under the single threshold of $105,000, so there is no surcharge. Packaging takes taxable income down to $90,990, but the reported $17,000 is added back, and $90,990 + $17,000 = $107,990. That is over the line, and the surcharge is 1% of it: $1,080. The person pays the same $9,010 of bills either way. Paying them through packaging leaves them $2,883 − $1,080 − $241 = $1,562 better off, which is $1,562 ÷ $9,010 × 100 = $17.34 for every $100 of bills packaged, against $29.32 for the nurse's family.
Add private hospital cover and the surcharge row disappears. The same person is then $2,642 better off. The surcharge is one test. HELP and child support work the same way: the whole reported amount counts, and the calculator shows each one when you enter it.
This calculator answers one question: what salary packaging does for your household. The Net Income Modeller works out tax, Family Tax Benefit, child care subsidy, child support, Rent Assistance and Parenting Payment together, so you can see what a salary package, a pay rise or an extra day's work leaves your family.
The tax saving is the first number, and the one a tax-only calculator stops at. Packaging $9,010 of living costs takes $9,010 off your taxable income, so for someone whose top rate is 30% plus the 2% Medicare levy it saves $2,883 a year. What you are better off by depends on the provider's fee and on what the amount on your income statement does to other things. For a nurse at a public hospital on $85,000, with a partner on $30,000 and two children, nothing else moves, and after a $241 fee the household is $2,642 a year better off: about $29.32 for every $100 of bills packaged. For a single person on $100,000 with no private hospital cover, the Medicare levy surcharge takes $1,080 of the saving back, and they are $1,562 better off.
Your employer pays some of your everyday bills, such as rent, mortgage repayments and household bills, from your pay before tax, up to a cap. You are taxed on what is left, so you pay less income tax and Medicare levy. You still pay the same bills, so the saving is the tax you would otherwise have paid on that money. A provider usually runs the account for a fee, and your employer decides what it allows.
It depends on who pays your wages. At public and not-for-profit hospitals and public ambulance services, the cap is $9,010 a year of living costs, and a separate $2,650 for meals and venue hire if your employer allows it. At public benevolent institutions and health promotion charities it is $15,900 of living costs, with the same $2,650. If the spending includes GST that your provider claims back, the living costs cap is lower: $8,172 at a hospital and $14,421 at a charity. Your employer's own rules can be narrower than the law.
If what your employer provides to you in the fringe benefits tax year (1 April to 31 March) is more than $2,000, your employer reports it on your income statement, multiplied by 1.8868. For $9,010 that is $17,000. You are not taxed on it. It is there so that other tests can add it back. If the year's total is $2,000 or less, nothing is reported.
It can. Services Australia adds the reported amount back when it works out your family's income. For employees of public and not-for-profit hospitals, public ambulance services, public benevolent institutions and health promotion charities, 53% of the reported amount counts. For everyone else, all of it counts. For a hospital employee packaging $9,010, the reported amount is $17,000 and 53% of that is $9,010, the same as came off taxable income, so family income for these payments stays where it was and the payments stay level.
Yes. Child support counts all of the reported amount, including for hospital and charity employees, so packaging can raise what a parent who pays owes. Child support uses the last full year of income that the Tax Office has passed on, so a change in packaging shows up later, from a new assessment period.
Yes. HELP repayments count all of the reported amount, for every employer, so packaging can raise your repayment. The ATO's own example for 2026-27: a repayment income of $86,380 gives a repayment of $2,527.80, at 15 cents for each dollar over $69,528.
Yes, if you do not have appropriate private hospital cover. The surcharge income test counts all of the reported amount, and a couple's incomes are added together. For 2026-27 the single threshold is $105,000 and the family threshold is $210,000. A single person on $100,000 is under the line. Packaging $9,010 lowers taxable income to $90,990 but adds back $17,000, so surcharge income becomes $107,990 and the surcharge is $1,080.
It varies by provider and employer, and your provider's price list has yours. We use about $241 a year as an example and take it from after-tax money. A provider that takes its fee before tax makes the saving a little higher.
Tax Office and Services Australia pages read on 20 October 2026. The two worked examples were run in the calculator on 22 October 2026.
General information about salary packaging for 2026-27 as at 22 October 2026, not personal advice and not an assessment. Your employer's rules, the Tax Office and Services Australia decide your own figures. Confirm your own situation with them and with your tax agent.