What Is General Living Expenses Salary Packaging?
General living expenses salary packaging is a way to boost your take-home pay by using pre-tax dollars to pay for everyday costs. Under an arrangement with your employer, you agree to sacrifice a portion of your salary in exchange for benefits that cover things like rent, mortgage payments, groceries, utilities, and other personal expenses. The packaged amount is deducted from your gross salary before tax is calculated, which lowers your taxable income and the amount of tax you owe.
This type of salary packaging is not available to everyone. The Australian Tax Office (ATO) sets strict rules about which employers can offer it. Generally, only employees of public hospitals, public health services, charities, and certain other not-for-profit organisations are eligible. For-profit businesses cannot provide salary packaging for general living expenses because the benefits would attract fringe benefits tax (FBT) at a rate that makes it uneconomical. If you work in the public or not-for-profit sector, check with your employer or a salary packaging provider to see if you can participate.
How Does It Affect Your Take-Home Pay?
The main benefit of general living expenses salary packaging is that it reduces your taxable income. This means you pay less income tax and Medicare levy, leaving you with more money in your pocket each week. The exact saving depends on your marginal tax rate and the amount you package.
Using the tax rates for 2026–27 from the ATO, the first $18,200 of your income is tax-free. Then you pay 15% on income between $18,201 and $45,000, 30% on income between $45,001 and $135,000, 37% on income between $135,001 and $190,000, and 45% on anything above $190,000. The Medicare levy adds another 2% (with possible reductions for low-income earners).
Consider someone earning the national full-time average of $108,352 per year. Their marginal tax rate is 30% plus the 2% Medicare levy, so every dollar they package saves them 32 cents in tax. If they package $10,000 of general living expenses, their taxable income drops to $98,352, and they save about $3,200 in tax. That means their weekly take-home pay increases by roughly $61. The more you package (up to any cap set by your employer or the ATO), the greater the saving.
It is important to note that salary packaging does not reduce your superannuation guarantee contributions, which are calculated on your ordinary time earnings before packaging. Your employer must still pay the super guarantee on your full salary.
Comparing to the National Full-Time Average
The national full-time adult ordinary-time average, as measured by the ABS Average Weekly Earnings for May 2026, is $2,083.70 per week, or about $108,352 per year. This is the benchmark used on this site to show where your salary sits on the line. If you use general living expenses salary packaging, your effective take-home pay can be higher than someone earning the same gross salary without packaging.
For example, two people both earning the average of $108,352. One does not salary package and takes home about $78,000 after tax (depending on deductions and the Medicare levy). The other packages $15,000 of general living expenses, reducing taxable income to $93,352, and takes home roughly $81,000 after tax. That is an extra $3,000 per year, or about $58 per week. While the gross salary is the same, the packaged employee effectively has more spending power.
This difference can be significant when you Place a salary on the line and see how your take-home pay compares to the national average. The site shows your weekly and hourly amounts based on a 38-hour week, and the distance from the full-time average. Salary packaging can move you further above the line in terms of disposable income, even if your gross salary stays the same.
Other Considerations
Salary packaging for general living expenses often has caps. For many public hospital employees, the ATO allows up to $15,900 per year (plus an additional $2,650 for meal entertainment) under the FBT exemption. However, these figures are not set in the on-site notes and may change. Always check the latest ATO guidelines or speak to a salary packaging provider.
You should also be aware that salary packaging can affect your eligibility for certain government benefits, such as Family Tax Benefit or the Medicare levy surcharge, because your adjusted taxable income is lower. It may also reduce your entitlement to the low-income tax offset or other offsets. Consider your whole financial situation before entering into a packaging arrangement.
For more detailed guidance on how salary packaging interacts with the tax system and your overall pay, see the Guides section of this site. You can also explore how your salary compares across States and territories to see if packaging might be more beneficial in your location.
Summary
General living expenses salary packaging is a valuable tool for eligible employees to increase their take-home pay by reducing taxable income. While the national full-time average of $108,352 provides a useful reference point, your actual spending power can be higher if you can package everyday costs. The exact benefit depends on your salary, your employer’s policies, and the caps set by the ATO. Use the tools on this site to see where your pay sits and how packaging might change your position.