Most employees can only salary package things that are FBT-exempt or FBT-effective, because their employer pays 47% FBT on the rest. Some not-for-profit employers get a capped FBT exemption instead, which is why a nurse can pay their rent from pre-tax salary and a bank teller can't. The employer types and caps, per employee per FBT year (1 April – 31 March):
| Employer type | Cap (grossed-up) | ≈ Real benefits (Type 2) |
|---|---|---|
| Public benevolent institutions (not public hospitals), health promotion charities | $30,000 | ≈ $15,900 |
| Public hospitals, NFP hospitals, public ambulance services | $17,000 | ≈ $9,010 |
| Rebatable employers (certain charities and NFPs) | 47% FBT rebate capped at $30,000, a discount, not an exemption | |
The famous "$15,900" isn't in any legislation: it's the $30,000 grossed-up cap divided by the Type 2 gross-up factor of 1.8868. Same for the hospital figure: $17,000 ÷ 1.8868 ≈$9,010. If any benefits attract GST credits (Type 1), the higher 2.0802 factor applies to them and the cash room shrinks, which is why providers steer packages toward GST-free items like rent and mortgage payments.
What it's worth
A charity worker on $75,000 who packages the full $15,899 pays income tax and Medicare levy on $59,101 instead of $75,000, a saving of about $5,201 a year at FY 2026–27 rates, before the provider's admin fees. The money goes on rent or groceries either way; it is just taxed less on the way through.
On top, meal entertainment (restaurants, functions, holiday accommodation under entertainment facility leasing) has its own separate $5,000 grossed-up cap.
The RFBA and your HECS repayment
Packaged benefits over $2,000 of taxable value are still reported on your income statement as a reportable fringe benefits amount, grossed up at 1.8868, so packaging the full PBI cap puts a $30,000 RFBA on your record. You pay no income tax on it, but income tests count it, and the big one for this workforce is HECS:
HECS repayment income = taxable income plus reportable fringe benefits. Our $75,000 charity worker with a HELP debt has repayment income of $89,101, $59,101 taxable plus the $30,000 RFBA. Their compulsory repayment becomes $2,936 instead of $821, $2,115 a year more, taken straight out of the packaging saving of $5,201. Packaging is usually still well ahead, but the net benefit is smaller than the headline saving. The HECS calculator accepts repayment income directly so you can run your own case; the same add-back affects the Medicare levy surcharge income test.
Questions to ask before signing up
- Fees: packaging providers charge per-pay admin fees, get the annual total and subtract it from the tax saving.
- Which gross-up applies: GST-free spends (rent, mortgage) keep the full cap; GST-inclusive ones shrink it.
- Your HELP debt: get the projected RFBA and recompute your repayment before, not after.
- Government payments: family assistance and other means-tested payments use their own income definitions that can count packaged amounts, check the specific test with Services Australia before relying on a net figure.
- FBT year vs tax year: the cap runs 1 April – 31 March, so a mid-year start means a partial cap in year one.
Frequently asked questions
I work for two eligible employers. Do I get two caps?
The caps apply per employee per employer per FBT year, and packaging arrangements differ, ask each employer's packaging provider how they administer it and get the combined position in writing before relying on it.
Sources
Figures on this page come from the following primary sources. The date is when we last checked the page against the source.
- Fringe benefits tax rates and thresholds (ATO), checked 25 August 2026.
- Reportable fringe benefits for employees (ATO), checked 25 August 2026.
Related
Novated leases & HECS: the same RFBA mechanism through a car lease. Salary sacrifice calculator: packaging into super instead, different rules, no RFBA. HECS repayment income: all the add-backs in one place.
Figures current as at 25 August 2026. Caps verified against the ATO's FBT rates and thresholds page (Table 5, dated 20 May 2026); see our methodology. General information only, not financial advice.