What is charity salary packaging?
Charity salary packaging is a way for employees of eligible not-for-profit organisations to receive part of their salary as tax-free or tax-concession benefits. Instead of paying income tax on that portion, it is treated as a fringe benefit that is exempt from Fringe Benefits Tax (FBT) under certain conditions. This can significantly increase your take-home pay compared to a standard salary.
The Australian Taxation Office (ATO) allows employees of public benevolent institutions, health promotion charities, and some other not-for-profit entities to package up to $15,900 per FBT year for general living expenses (such as mortgage, rent, school fees, or credit card payments) plus an additional $2,650 for meal entertainment and other specific items. These caps are indexed periodically. The benefit is available only if your employer offers a salary packaging arrangement and you are employed by an eligible organisation.
How it affects your take-home pay
When you salary package, your taxable income is reduced by the packaged amount. For example, if your base salary is $90,000 and you package $15,900, your taxable income becomes $74,100. Using the 2026–27 tax rates (nil to $18,200; 15% to $45,000; 30% to $135,000; plus 2% Medicare levy), you would pay less tax overall. The exact saving depends on your marginal tax rate. At the 30% rate, packaging $15,900 saves about $4,770 in tax plus Medicare levy, effectively boosting your after-tax income.
This means that even if your base salary is below the national full-time average of $108,352 (ABS Average Weekly Earnings, May 2026), the packaging benefit can lift your effective take-home pay closer to or above that line. However, the ABS does not publish a specific average for charity salary packaging, so the comparison is individual.
Where it sits against the national average
The national full-time adult ordinary-time average is $108,352 per year (based on $2,083.70 per week × 52). 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 from 1 July 2026 is $26.44 per hour, or about $52,255 per year on a 38-hour week.
If your base salary is at the full-time median of $90,532 and you package the maximum $15,900, your taxable income drops to $74,632. After tax, your take-home pay would be higher than someone earning the same base salary without packaging. In fact, your effective after-tax income could exceed the national full-time average, depending on your tax bracket. Conversely, if your base salary is already above the average, packaging still reduces tax but the relative benefit is smaller.
It is important to note that the packaging caps apply per employer and per FBT year. Some employees may also have access to additional benefits like salary sacrificing for cars or superannuation, but those are subject to different rules.
Other considerations
Charity salary packaging is not available to all workers. Only employees of eligible not-for-profit organisations can use it. The ATO defines eligibility based on the employer’s status (e.g., public benevolent institution, health promotion charity, or certain other NFPs). If you work for a for-profit company, you cannot access these tax-free caps.
When comparing your salary to the national average, remember that the ABS figures are for full-time adult ordinary-time earnings, before tax. Your packaging benefit is a tax concession, not a wage increase. The site’s line is based on the ABS average, and you can place a salary on the line to see how your base salary compares. For more context on how different industries and occupations stack up, see the industry medians and job medians pages.
If you are considering a role in the charity sector, factor in the potential packaging benefit. A base salary that appears below the national average may actually provide higher take-home pay once packaging is applied. However, always check with your employer or a tax professional to confirm your eligibility and the exact caps that apply.
For a deeper understanding of how the figures on this site are set, visit How the figures are set. You can also explore Guides on salary packaging and other compensation topics.