How Not for Profit Salary Packaging Affects Your Take-Home Pay

Compare Job Offers by What Reaches Your Bank Account

When you're weighing up job offers, the headline salary isn't the full picture. What matters is the amount that lands in your bank account after income tax, the Medicare levy, and any salary sacrifice arrangements. This is especially important when one employer offers not for profit salary packaging and another doesn't.

What Is Not for Profit Salary Packaging?

Salary packaging (also called salary sacrifice) is an agreement between you and your employer to swap part of your pre-tax salary for benefits of similar value. The Australian Taxation Office explains that under an effective arrangement, you permanently forego future salary and receive benefits instead. This lowers your taxable income, so you pay less tax.

Not-for-profit organisations often receive fringe benefits tax (FBT) concessions or exemptions. This means they can provide fringe benefits without paying FBT, making packaging more attractive for you.

How Salary Packaging Changes Your Take-Home Pay

The ATO provides a clear example for the 2025–26 year using a $65,000 salary and a car benefit. Here's a summary:

• No packaging: Taxable income $65,000, income tax $10,288, Medicare $1,300, car expenses $11,500 → net disposable income $41,912.
• Packaging without employee contributions: Salary sacrifice $17,353, taxable income $47,647, tax $5,082, Medicare $953, no car expenses → net disposable income $41,612 (slightly less because FBT reduces the benefit).
• Packaging with employee contributions: Salary sacrifice $4,145, employee contribution $7,000, taxable income $60,855, tax $9,045, Medicare $1,217 → net disposable income $43,593.

The third scenario shows that making an employee contribution to reduce FBT can boost your take-home pay.

Key Numbers for Your Comparison

• National minimum wage: $26.44 per hour, $1,004.90 per week (from 1 July 2026).
• Medicare levy thresholds: The latest single-person thresholds are $28,011 (lower) and $35,013 (upper). Full-time salaries pay the full 2%.
• Tax rates 2026–27: Tax-free up to $18,200, then 15c per $1 up to $45,000, 30c per $1 up to $135,000, and so on. The Low Income Tax Offset (LITO) can reduce tax for lower incomes.

Use these benchmarks to estimate your tax. For a precise figure, try our Take-home pay calculator.

What Benefits Can You Package?

There's no restriction on benefit types, but common ones include cars, super contributions, laptops, and childcare. From 1 April 2027, work-related items provided through salary sacrifice will no longer be FBT-exempt, so check the timing of any offer.

Super contributions are a special case: they are not fringe benefits if paid to a complying super fund. They are taxed at 15% inside super, which is lower than your marginal rate. But remember, your employer must still pay the full super guarantee (12% from 1 July 2026) on your ordinary salary, not the sacrificed amount.

How to Evaluate a Job Offer with Salary Packaging

1. Get the total remuneration package – ask for the base salary plus the value of any packaged benefits.
2. Understand employee contributions – some employers ask you to contribute post-tax to reduce their FBT liability. This can still leave you better off.
3. Calculate your net disposable income – use the ATO's method: start with annual remuneration, subtract the salary sacrifice amount, apply tax and Medicare, then subtract any employee contributions and expenses you would otherwise pay.
4. Compare fortnightly take-home – your pay office will deduct tax based on your reduced taxable income. The result is what hits your bank account.

Important Considerations

• Salary packaging can affect the Medicare levy surcharge, study loan repayments, child support, and some government benefits.
• You cannot claim a tax deduction for an expense your employer pays as part of your package.
• The arrangement must be entered into before you perform the work. You cannot sacrifice salary you have already earned.

Final Word

A job with not for profit salary packaging can put more money in your pocket, but only if you compare the full picture. Focus on the amount that reaches your bank account each fortnight, not the headline salary. For more guidance, see our Salary packaging guide and Tax and Medicare page.