Understanding salary sacrifice for charity
Salary sacrifice, also known as salary packaging, is an arrangement where an employee agrees to receive a lower gross salary in exchange for benefits provided by the employer. For employees of charitable institutions, the Australian Taxation Office (ATO) allows certain benefits to be provided without incurring fringe benefits tax (FBT). Common examples include additional superannuation contributions, car parking, and living-away-from-home allowances. The key point is that the gross salary figure reported to the Australian Bureau of Statistics (ABS) and used on this site is the amount before any salary sacrifice deduction. Therefore, if you earn $80,000 per year and salary sacrifice $10,000 to a charity, your gross salary for comparison remains $80,000, not $70,000.
The national full-time adult ordinary-time average from the ABS Average Weekly Earnings, May 2026, is $2,083.70 per week, or about $108,352 per year. This figure is the average of all full-time employees' ordinary-time earnings, before tax and before any salary sacrifice. The site's line uses this figure to show where your pay sits. If your gross salary is above this line, you are above the national average; if below, you are below.
How the national average is calculated
The ABS publishes Average Weekly Earnings twice a year, for May and November. The May 2026 figure is the most recent available. It is a mean, not a median. The full-time median from the ABS Employee Earnings survey (August 2025) is about $90,532 per year, and the all-employees median is about $74,100. The national minimum wage, set by Fair Work from 1 July 2026, is $26.44 per hour, $1,004.90 per week, or about $52,255 per year on a 38-hour week. Award minimums rose by 4.75% at the same time.
When you enter your gross annual salary into the tool, it calculates the weekly and hourly equivalents on a 38-hour week and shows the distance from the national full-time average. Because salary sacrifice is a deduction from gross pay, it does not affect the gross figure you enter. However, it does affect your taxable income and therefore your net pay. The How the figures are set page explains the methodology in more detail.
State and award variations
State full-time averages vary significantly. According to the on-site notes:
- New South Wales: about $109,658
- Victoria: about $106,137
- Queensland: about $106,064
- South Australia: about $102,450
- Western Australia: about $115,825
- Tasmania: about $96,008
- Northern Territory: about $103,173
- Australian Capital Territory: about $119,090
These differences reflect the industry composition of each state. For example, Western Australia's high average is driven by the mining industry, while the ACT's high average is due to the public sector and not-for-profit organisations. Salary sacrifice is more common in the ACT because many employees work for charities or government agencies that offer salary packaging. However, the gross salary figures reported to the ABS still capture the full pre-sacrifice amount, so the state averages are not reduced by salary sacrifice.
Award coverage also plays a role. The national minimum wage applies to award-free employees, but most employees are covered by a modern award or enterprise agreement. Some awards, such as the Social, Community, Home Care and Disability Services Industry Award, have specific provisions for salary packaging. These provisions can improve take-home pay but do not change the gross salary used in the national average. The States and territories page provides more detail on how location affects the line.
The role of the minimum wage
Fair Work sets the national minimum wage and award minimums. From 1 July 2026, the minimum wage is $26.44 per hour. Award minimums rose by 4.75% at the same time. Salary sacrifice cannot reduce an employee's pay below the applicable minimum wage or award rate. This ensures that even with salary packaging, employees receive at least the legal minimum. For example, if the award rate is $30 per hour, salary sacrifice cannot bring the effective hourly rate below $30. The gross salary must still meet the award minimum before any sacrifice.
Tax implications of salary sacrifice for charity
The ATO allows employees of public benevolent institutions and certain other charitable organisations to salary sacrifice up to a limit (the exact cap is not published here, but it is set by the ATO). The tax brackets for 2026–27 are: nil up to $18,200; 15% from $18,201 to $45,000; 30% from $45,001 to $135,000; 37% from $135,001 to $190,000; and 45% above $190,000. The Medicare levy of 2% applies before any reductions. Salary sacrifice reduces your taxable income, potentially lowering your marginal tax rate. However, the gross salary figure used for comparison on this site remains unchanged.
What salary sacrifice means for your payslip
When you salary sacrifice, your employer deducts the sacrificed amount from your gross pay before calculating tax. This reduces your PAYG withholding and increases your net pay. However, your gross salary as reported to the ABS (and as entered into this site) is the amount before that deduction. Therefore, if you are comparing your pay to the national average, you should use your gross salary, not your salary-sacrificed amount. For example, if your employment contract states a gross salary of $90,000 and you salary sacrifice $15,000, you would enter $90,000 into the tool. The tool will show that you are below the national average of $108,352, but your take-home pay may be higher than someone earning $90,000 without salary sacrifice due to tax savings.
Conclusion
Salary sacrifice for charity is a valuable way to reduce tax while supporting a cause, but it does not move your gross salary off the national line. The national full-time average is based on pre-sacrifice earnings. State and award differences can affect your gross salary, but salary sacrifice itself is a post-earnings adjustment. For a personal comparison, use the tool to Place a salary on the line.