Salary Packaging NSW Health: What It Means for Your Pay

What is salary packaging in NSW Health?

Salary packaging is a tax-effective arrangement where you exchange part of your future salary for non-cash benefits, such as a car, mortgage payments, or electronic devices. For NSW Health employees in public hospitals and ambulance services, the scheme is governed by the Health Professionals and Salaried Officers (State) Award 2025 and the NSW Health Policy Directive PD2018_044. The key benefit is that the packaged amount reduces your taxable income, lowering the PAYG tax withheld. However, your gross salary remains the same for award entitlements and superannuation.

Under the award, you can devote up to 100% of your salary to either salary sacrifice to superannuation or salary packaging, or a combination of both. The Fringe Benefits Tax (FBT) exemption cap is $17,000 grossed-up per year (grossed-up value), which means the actual value of benefits you can package without creating an FBT liability is currently about $9,009 per year. Any amount above that cap would incur FBT, which the employer passes on to you.

How salary packaging affects your pay

When you salary package, your employer deducts the value of the benefits plus administration fees and the employer’s share of tax savings from your gross salary. The remaining cash salary is then subject to PAYG tax. For example, if your gross annual salary is $80,000 and you package $9,009 in benefits, your taxable salary becomes $70,991. Using the 2026-27 tax rates (resident, with tax-free threshold and 2% Medicare levy), your tax would be approximately $12,500 instead of $15,200, saving you about $2,700. The exact saving depends on your marginal tax rate.

It’s important to note that salary packaging does not increase your total remuneration; it just changes the form. Your superannuation guarantee (12% from 1 July 2026) is still calculated on your gross salary of $80,000, so your super contributions are unaffected. Award entitlements like annual leave, sick leave, and penalty rates are also based on the gross award salary.

Comparing job offers with salary packaging

When reading a job ad for a NSW Health role, the advertised salary is usually the gross award salary. If the ad mentions salary packaging, it means you can choose to reduce your taxable income by packaging benefits. To compare offers, focus on the gross salary first. Use the Salary Index to see where that gross salary sits against the national line (100 = $108,352 annualised). For example, a NSW Health professional earning $85,000 gross has an index of about 78.5, below the NSW state index of 101.2 and the health care industry index of 97.8. The packaging does not change that index because the index is based on gross ordinary-time earnings.

However, packaging can improve your after-tax position. If you are comparing two offers—one with packaging and one without—calculate the net take-home pay after tax and Medicare levy, then add the value of the packaged benefits. For a fair comparison, also consider super contributions (both are likely 12% on gross salary) and any other benefits like leave loading.

Salary packaging and the Salary Index

The Salary Index measures gross ordinary-time earnings before any salary packaging or sacrifice. The national line of 100 is set by the ABS Average Weekly Earnings for full-time adults (May 2026: $2,083.70 per week, annualised $108,352). NSW has a state index of 101.2, meaning typical NSW full-time earnings are slightly above the national average. The health care and social assistance industry index is 97.8, slightly below the national line. These benchmarks help you see where a job offer sits relative to the broader market.

When a job ad says “salary packaging available,” it does not mean the advertised salary is higher; it means you can opt to receive part of your pay as tax-effective benefits. This is common in public health to attract and retain staff. For more context on how pay varies by state, see our states page. For industry comparisons, visit industries.

Practical example

Imagine two job offers for a health professional role in NSW:

• Offer A: $90,000 gross, no salary packaging.
• Offer B: $90,000 gross, with salary packaging up to $9,009.

Both have the same gross salary, so the index is the same: 83.0 (90,000 / 108,352 × 100). But after tax, Offer B could leave you with about $2,700 more in your pocket (or in benefits) because of the tax saving. However, you must use the packaged benefits (e.g., car lease, mortgage payments) and pay any administration fees. The net benefit depends on your personal circumstances.

Key takeaways

• Salary packaging reduces taxable income but not gross salary.
• The FBT exemption cap limits the tax-free benefit to about $9,009 per year.
• Super and award entitlements are based on gross salary.
• Use the Salary Index to compare gross salaries across jobs and industries.
• Always read the fine print: packaging may involve fees and shared savings.

For more on how pay works in different sectors, see our topics page. If you are comparing offers, start with the gross salary and then factor in packaging as a tax advantage.