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Salary packaging in the health industry: how it affects your gross pay, super and tax
Learn how salary packaging works in the health industry, including its impact on gross pay, superannuation and tax. Understand the salary index for health workers.
The health care and social assistance industry index is 97.8, meaning a typical full-time worker earns about 97.8% of the national average. Salary packaging does not change your gross salary index but can reduce your taxable income.
Salary packaging in the health industry
Salary packaging, also known as salary sacrifice, lets you pay for certain expenses with pre-tax dollars. In the health industry, it is common among public hospital employees and those working for charitable institutions. Your employer deducts the cost of the benefit from your gross pay before calculating tax, which lowers your taxable income. Your gross salary – the figure used in the Salary Index – stays the same, but your take-home pay can increase because you pay less tax.
How the salary index relates to health workers
The health care and social assistance industry has a salary index of 97.8, meaning a typical full-time adult worker earns about 97.8% of the national average of $108,352 a year. That works out to roughly $106,000 annualised. Salary packaging does not change that index figure; it is a separate arrangement that affects your tax and super. The index is based on gross ordinary-time earnings before any packaging. See how the index works for more detail.
Superannuation and salary packaging
Your super guarantee is 12% of your ordinary time earnings (OTE) from 1 July 2026. The ATO generally treats salary sacrificed amounts as part of OTE, so your employer’s super contributions are based on your pre-packaged salary. However, some benefits may reduce OTE – for example, if you sacrifice a car and your employer reduces your base salary. Check with your payroll. The super guarantee maximum contribution base is $270,830 for 2026–27. Salary packaging for additional super contributions is also common in the health sector and can boost your retirement savings.
Tax implications
Salary packaging reduces your taxable income, so you move down the tax brackets. For 2026–27, the tax rates are: nil up to $18,200, 15% from $18,201 to $45,000, 30% to $135,000, 37% to $190,000, and 45% above. Plus a 2% Medicare levy. If you package $10,000 of expenses, you save tax at your marginal rate. For example, a health worker earning $90,000 taxable income after packaging would pay 30% on that portion, saving $3,000 in tax plus Medicare. Many public hospitals and non-profit health employers offer salary packaging with caps on tax-free benefits, such as up to $9,010 for meal entertainment or $2,650 for other benefits (2026–27 figures). These caps are set by the ATO and can change each year.
Awards and minimum pay
Even with salary packaging, you must be paid at least the award minimum or the national minimum wage. The national minimum wage from 1 July 2026 is $26.44 per hour, $1,004.90 per week, index 48.2. Modern awards in health, such as the Health Professionals and Support Services Award, set higher rates. Salary packaging cannot reduce your cash pay below the award rate. For award-specific rates, check pay guides.
State differences
The salary index varies by state. For example, the ACT has an index of 109.9, while Tasmania is 88.6. Health workers in different states may have different typical pay, but salary packaging rules are mostly federal. See states for more on how your location affects the index.
Summary
Salary packaging in the health industry can boost your take-home pay by reducing tax, but it does not change your gross salary index. Your super is generally protected because the guarantee is based on ordinary time earnings. Always check with your employer and a tax professional to understand how packaging affects your specific situation. For more on industry benchmarks, visit industries.
Questions people ask
What is salary packaging in the health industry?
Salary packaging, also called salary sacrifice, lets health industry employees pay for certain expenses – such as cars, laptops, or additional super contributions – with pre-tax dollars. Your employer deducts the cost from your gross pay before calculating tax, lowering your taxable income. It is common in public hospitals and charitable health organisations.
How does salary packaging affect my tax in the health industry?
Salary packaging reduces your taxable income, so you pay less income tax and Medicare levy. For 2026–27, tax rates are nil up to $18,200, 15% from $18,201 to $45,000, 30% to $135,000, 37% to $190,000, and 45% above, plus a 2% Medicare levy. Packaging $10,000 at the 30% marginal rate saves $3,000 in tax plus Medicare. Some health employers offer caps on tax-free benefits.
Does salary packaging affect my super in the health industry?
Generally, your super guarantee (12% from 1 July 2026) is calculated on your ordinary time earnings (OTE), which the ATO treats as including salary sacrificed amounts. So your employer’s super contributions are based on your pre-packaged salary. However, some benefits may reduce OTE – check with your payroll. The super guarantee maximum contribution base is $270,830 for 2026–27.