What is salary package meal entertainment?
Salary package meal entertainment is a common fringe benefit offered by some Australian employers, particularly in the public sector, health, and not-for-profit organisations. It allows you to use pre-tax income to pay for meals, entertainment, and sometimes associated expenses like travel or accommodation. The benefit is provided under the Fringe Benefits Tax (FBT) regime, meaning your employer may be liable for FBT, but many employers pass on the savings to you through a salary packaging arrangement.
This type of packaging does not change your gross salary—the figure that appears on your payslip and is reported to the ATO. Instead, it reduces your taxable income by the amount of the benefit, lowering the tax you pay. The result is higher take-home pay for the same gross salary.
How salary packaging affects your comparison to the average
The national full-time adult average ordinary-time earnings, as measured by the ABS Average Weekly Earnings survey for May 2026, is $2,083.70 per week or about $108,352 per year (multiplied by 52 weeks). This figure is based on gross earnings before any salary sacrifice or fringe benefits. When you compare your salary to this average, you are comparing your gross pay, not your total remuneration package.
If your gross salary is below the average, salary packaging meal entertainment can help you achieve a higher standard of living without needing a pay rise. For example, if your gross salary is $100,000, you are below the national full-time average. But if you salary package $5,000 in meal entertainment, your taxable income drops to $95,000, saving you tax. Your gross salary remains $100,000, so your position relative to the average does not change, but your disposable income increases.
Conversely, if your gross salary is above the average, salary packaging can still be beneficial, but it will not push your gross salary higher. The average is a benchmark for gross earnings, not total compensation.
The role of the ATO and FBT
The Australian Taxation Office (ATO) defines meal entertainment as food, drink, and entertainment provided to employees or associates. Employers can choose to use the 50/50 method or the 12-week register method to calculate FBT. Many employers cap the amount you can salary package for meal entertainment, often around $2,000 to $5,000 per year, to keep FBT manageable.
It is important to note that salary packaging meal entertainment is not available to everyone. It is most common in the public sector, hospitals, universities, and charities. Private sector employees may have access through specific enterprise agreements. The Fair Work Commission's Modern Awards Pay Database does not typically cover salary packaging arrangements, as they are negotiated individually or through enterprise agreements.
Practical considerations for employees
If you are considering salary packaging meal entertainment, check with your employer whether they offer it and what the limits are. You will need to keep receipts and submit claims. The benefit is usually paid as a reimbursement or via a card. Remember that salary packaging reduces your taxable income, which can affect your eligibility for certain government benefits, such as the Family Tax Benefit or the Medicare Levy Surcharge.
When comparing your salary to the national average, it is helpful to think about your total remuneration package, not just your gross salary. The ABS average is a useful benchmark, but it does not capture the value of fringe benefits. For a more complete picture, you can also look at the full-time median earnings of about $90,532 (ABS Employee Earnings, August 2025) or the all-employees median of about $74,100.
Where to go from here
- Place a salary on the line to see how your gross pay compares to the national average.
- Guides on salary packaging and other compensation topics.
- How the figures are set explains the sources behind the averages and medians.
Summary
Salary package meal entertainment is a valuable way to increase your take-home pay without changing your gross salary. It does not alter your position relative to the ABS full-time average of $108,352, but it can make a given salary go further. Always check with your employer and consider the tax implications before entering into a salary packaging arrangement.