Can I salary sacrifice my mortgage?
Salary sacrificing your mortgage is a common question for Australian employees looking to reduce tax. The short answer is that the ATO generally does not allow salary sacrifice for a personal home loan because it is a private expense. However, there are nuances depending on your industry, award, and state. Understanding these can help you see where your pay sits relative to the national full-time average of $108,352.
What salary sacrifice means
Salary sacrifice is an arrangement where you forego part of your pre-tax salary in exchange for a benefit provided by your employer. The benefit is usually exempt from fringe benefits tax (FBT) or subject to a concession. Common examples include superannuation contributions, cars, and electronic devices. Mortgage payments are not typically eligible because they are not work-related and do not qualify for FBT exemptions.
Exceptions and award conditions
Some employees can salary package housing costs, which may include mortgage payments, under specific circumstances. For instance, remote area housing benefits are often exempt from FBT if the employee lives and works in a remote location. Similarly, employees of public hospitals, charities, and certain not-for-profit organisations may have access to salary packaging for living expenses, though housing is capped. Award conditions and enterprise agreements can also provide for housing allowances or subsidies that effectively reduce your taxable income.
These exceptions mean that your effective pay can move off the national line. For example, a worker in a remote area with a packaged mortgage could have a higher take-home pay than the national average, even if your base salary is below the $108,352 line. Conversely, most employees without such benefits will have their pay closer to the standard award or market rate.
State differences and the national average
The national full-time adult ordinary-time average is $2083.70 per week, or about $108,352 per year (ABS Average Weekly Earnings, May 2026). But state averages vary. For instance, the ACT full-time average is about $119,090, while Tasmania is about $96,008. These differences reflect local economies, industry mix, and cost of living. Salary packaging opportunities also vary by state. In Western Australia, where the full-time average is about $115,825, mining and remote area work often include housing benefits. In contrast, Tasmania's lower average may reflect fewer such arrangements.
Award conditions also play a role. The national minimum wage from 1 July 2026 is $26.44 per hour, or about $52,255 per year on a 38-hour week. Award minimums rose 4.75% that year. But many awards include allowances for housing, travel, or remote work that can push effective pay above the minimum. For example, the Pastoral Award includes a district allowance for remote areas. These allowances are not salary sacrifice but can be packaged in some cases.
How the figures are set
The site's line is based on the ABS Average Weekly Earnings for full-time adult ordinary-time earnings, multiplied by 52. This is a national average, not a median. The full-time median is about $90,532, and the all-employees median is about $74,100 (ABS Employee Earnings, August 2025). The national minimum wage is set by Fair Work. Medians and averages are distinct: the average is higher than the median because high earners pull it up. When you consider salary packaging, your taxable income may be lower than your gross salary, so your pay relative to the average can shift.
Practical steps
If you are asking "can I salary sacrifice my mortgage", first check your award or enterprise agreement. If you work in a not-for-profit or remote area, ask your employer about salary packaging policies. The ATO provides guidance on FBT exemptions. For most employees, the answer is no, but understanding state and award differences helps you see where your pay sits against the national line. Guides on salary packaging and How the figures are set can provide more detail.
Summary
While you generally cannot salary sacrifice your mortgage, exceptions exist for remote area workers and certain not-for-profit employees. State averages range from $96,008 to $119,090, and award conditions can further affect your effective pay. The national full-time average of $108,352 is a benchmark, but your actual position depends on your state, industry, and any packaging arrangements. Always consult a tax professional for your specific situation.