Salary packaging for nurses and health workers: caps and savings
Public and not-for-profit hospital staff can take home thousands more each year by packaging part of their salary. Here's how the caps work.
Key points
- Hospital and ambulance staff can package $9,010 a year tax-free ($17,000 grossed-up).
- Meal entertainment adds up to $2,650 more.
- Caps reset each FBT year on 1 April.
- A nurse on $90,000 takes home about $2,883 more a year from the main cap.
- Reportable fringe benefits still count for HECS, the MLS and Centrelink.
If you work for a public or not-for-profit hospital, you can have part of your salary paid as tax-free benefits. For a nurse, midwife, allied health worker or ward clerk, that's typically worth a few thousand dollars a year in extra take-home pay, for the same total salary. Here's how the caps work and what you could save.
Calculate your packaging saving
Why health workers can package more
Normally, when an employer pays your personal bills, it pays fringe benefits tax. Public and not-for-profit hospitals and public ambulance services are exempt from FBT up to a cap for each employee. That lets them pay some of your salary as benefits, such as your rent, mortgage or credit card, with no tax for you or them.
The packaging caps
| Employer type | Grossed-up cap | Amount you can package |
|---|---|---|
| Public and not-for-profit hospitals, public ambulance services | $17,000 | $9,010 |
| Public benevolent institutions and health promotion charities | $30,000 | $15,900 |
| Salary packaged meal entertainment and venue hire (extra) | $5,000 | $2,650 |
The caps are written as grossed-up values: the amount of pre-tax salary needed to buy the benefit after tax. Dividing by the FBT gross-up rate of 1.8868 gives the dollars you can actually package, about $9,010 for hospital staff. If an organisation is both a hospital and a public benevolent institution, the hospital cap applies.
Caps run on the FBT year, from 1 April to 31 March, not the financial year. Unused cap doesn't carry over, so check your balance before 31 March.
Meal entertainment
On top of the general cap, you can package up to about $2,650 a year of meal entertainment (eating out, catering) and holiday accommodation or venue hire for functions. It's usually paid via a separate card and has rules about what counts, so check with your packaging provider. Groceries and takeaway eaten at home normally don't count.
How much nurses save
Because the packaged amount is taken out of your taxable income, your saving is roughly your marginal tax rate (plus the 2% Medicare levy) on what you package. For most nurses earning between $45,000 and $135,000, that's 32%.
| Salary | Packaging $9,010 | Plus $2,650 meal entertainment | Extra per fortnight (both) |
|---|---|---|---|
| $60,000 | $3,018 | $3,906 | $150 |
| $75,000 | $2,893 | $3,781 | $145 |
| $90,000 | $2,883 | $3,731 | $144 |
| $110,000 | $2,883 | $3,731 | $144 |
Our salary packaging calculator using 2026–27 resident tax rates, before any provider fees and without HECS-HELP.
Example: a registered nurse on $90,000 packaging the full $9,010 for rent takes home about $2,883 more a year. Adding meal entertainment lifts that to about $3,731, or $144 a fortnight. The total salary is unchanged; less of it goes to tax.
What you can package
- Rent or mortgage repayments.
- Credit card, personal loan and other debt repayments.
- Everyday bills such as utilities, school fees and insurance, depending on your provider.
- A novated lease on a car, which sits outside the $9,010 cap and has its own rules.
- Extra super, laptops and other items your employer allows.
Things to watch
- Reportable fringe benefits. The grossed-up value of what you package (about $17,000 if you use the full $9,010) appears on your income statement. It isn't taxed, but it counts toward HECS-HELP repayments, the Medicare levy surcharge, the private health insurance rebate, child support and many Centrelink payments.
- Fees. Some providers charge an admin fee. Even at a few hundred dollars a year, packaging usually still comes out well ahead.
- Private hospitals don't qualify for these caps. Private hospital and aged care staff may have different arrangements, so ask your employer.
- Two jobs. If you work for two eligible employers, each one can usually give you its own cap. Check with both providers.
- Low incomes. If you earn under about $45,000, your tax rate is low and the saving is smaller, although it can still be worthwhile.
To get started, contact your employer's salary packaging provider. You'll set a fortnightly amount and nominate where the money goes; most providers can have it running within a pay cycle or two.
Frequently asked questions
What is the salary packaging cap for nurses?
For public and not-for-profit hospital staff, $9,010 a year (a grossed-up value of $17,000), plus up to $2,650 for meal entertainment and venue hire.
How much does salary packaging save a nurse?
On a $90,000 salary, packaging the full $9,010 is worth about $2,883 a year in extra take-home pay, or about $3,731 with meal entertainment.
Does salary packaging affect my HECS repayments?
Yes. Your reportable fringe benefits are added to your repayment income, so your HECS-HELP repayment can go up even though your taxable income goes down.
Sources
- ATO: FBT-exempt organisations and capping thresholds
- ATO: FBT return instructions for not-for-profit employers
- Moneysmart: salary packaging
More guides
Last reviewed October 2026. This guide is general information only. It isn't financial, tax, credit or legal advice and doesn't consider your circumstances. Rules change, so check the official sources below or speak to a licensed professional before you make a decision.