Home / Guides / Tax, super and packaging
Salary Packaging for Not-for-Profit in Australia: How It Affects Your Pay on the Salary Index
Understand salary packaging for not-for-profit in Australia and how it shifts your effective pay against the national salary index of 100.
The salary index for not-for-profit roles is uncertain because packaging varies by employer, but typical base salaries often sit below the national line of 100, though packaging can boost take-home pay.
Salary Packaging for Not-for-Profit in Australia
Salary packaging for not-for-profit in Australia is a way to boost your take-home pay by using pre-tax income for personal expenses. If you work for an eligible not-for-profit (NFP) organisation, you can salary package up to $15,900 per year tax-free for general living costs, plus an extra $2,650 for meal and entertainment. This is a significant benefit, especially when your base salary might be below the national average.
Where Does NFP Pay Sit on the Salary Index?
The Salary Index measures gross full-time adult ordinary-time earnings, with 100 equal to $108,352 per year (based on ABS Average Weekly Earnings, May 2026). For not-for-profit roles, base salaries vary widely. Many NFP employees work in health care and social assistance, which has an industry index of 97.8 – slightly below the national line. Others in education and training (index 105.5) may earn above it. But because salary packaging reduces taxable income, your effective pay can be higher than the index suggests.
For example, a community worker on a base salary of $85,000 (index 78.4) could package $15,900, reducing taxable income to $69,100. After tax (using 2026–27 rates), take-home pay might be around $65,000, compared to about $59,000 without packaging. That’s a difference of $6,000 – equivalent to a gross salary increase of roughly $8,500. Yet the index still shows 78.4. So when comparing roles, look beyond the index to include packaging benefits.
How Salary Packaging Works
Salary packaging is not a salary increase; it’s a tax concession. You elect to sacrifice part of your salary to pay for approved expenses. The employer then pays those expenses from your pre-tax income. The Australian Taxation Office (ATO) sets the caps: $15,900 for general benefits and $2,650 for meal and entertainment. These are separate from the $30,000 cap for cars under novated leases. The benefit is that you pay less income tax and Medicare levy (2%).
Not all NFP employers offer packaging. It is most common in public benevolent institutions, charities, and some religious organisations. Check with your employer or refer to pay guides for award conditions. The Fair Work Ombudsman (not linked) sets minimum wages, but packaging is separate from awards.
Comparing NFP Salaries Across States
State indexes show where pay typically sits. For example, NSW has an index of 101.2, Victoria 98, and Tasmania 88.6. If you work for an NFP in Tasmania, your base salary might be lower, but packaging can help close the gap. In Western Australia (index 106.9), NFP salaries may be higher due to mining-related demand, but packaging is still valuable.
Tax Implications
Salary packaging reduces your taxable income, which can lower your marginal tax rate. For 2026–27, resident tax rates are: nil to $18,200; 15% to $45,000; 30% to $135,000; 37% to $190,000; 45% above. Medicare levy is 2%. If you package $15,900 and your taxable income drops from $90,000 to $74,100, you save about $4,770 in tax (30% bracket) plus $318 in Medicare levy. That’s over $5,000 extra in your pocket.
Superannuation and Salary Packaging
Super guarantee is 12% from 1 July 2026, on your ordinary-time earnings. Salary packaging does not reduce your super, because the employer must pay super on your pre-packaged salary (the higher amount). So you still get super on your full base salary, not the reduced figure. This is a key advantage.
Is Salary Packaging Right for You?
If you work for an eligible NFP, salary packaging can significantly improve your financial position. However, it’s not a one-size-fits-all. Consider your expenses, tax bracket, and whether your employer offers it. Use the how the index works page to understand how gross pay compares, but remember that packaging adds a layer of complexity. For more on related topics, see topics.
Final Thoughts
Salary packaging for not-for-profit in Australia is a valuable tool, but it doesn’t change your salary index number. The index remains a benchmark for gross earnings. When evaluating a job offer, calculate your effective take-home pay including packaging. That will give you a truer picture of where you stand against the national line.
Questions people ask
What is salary packaging for not-for-profit in Australia?
Salary packaging for not-for-profit (NFP) allows employees to use pre-tax income to pay for certain expenses, such as mortgage, rent, or car costs, up to $15,900 per year tax-free, plus $2,650 for meal and entertainment. This reduces taxable income and can increase take-home pay. It is available to employees of eligible NFP organisations, including charities and public benevolent institutions.
How does salary packaging affect my position on the salary index?
The salary index compares gross ordinary-time earnings before tax and packaging. If your base salary is, say, $80,000 (index 73.8), packaging does not change that index number. However, your effective take-home pay may be higher than someone earning the same gross salary without packaging, because you pay less tax. The index remains a measure of gross pay, not net benefits.
Are not-for-profit salaries generally lower than the national average?
Many not-for-profit roles, especially in health care and social assistance (industry index 97.8) and education (105.5), pay near or slightly below the national line of 100. However, salary packaging can offset lower base pay. For example, a worker on $90,000 (index 83.1) with full packaging could have a take-home equivalent to a $100,000+ salary without packaging. The index only reflects the base gross figure.