Yes, many lenders count salary packaging, but not all of them count it the same way. Some add the packaged amount back to your income as tax-free money, some count only the taxable pay on your payslip and some sit in between. On the same package, that difference can move your borrowing power by tens of thousands of dollars.

What is salary packaging?

Salary packaging is an arrangement with your employer to take part of your pay as benefits before tax. It is most valuable at employers that are exempt from fringe benefits tax up to a cap, which is why it is common for hospital staff, paramedics and people who work for charities.

FBT exemption caps per employee, grossed-up
Employer Cap
Public and not-for-profit hospitals, public ambulance services $17,000
Public benevolent institutions and health promotion charities $30,000
Salary-packaged meal entertainment and entertainment facility leasing A separate $5,000 cap

The caps are grossed-up values set by the ATO, so the amount of pay you package is smaller than the cap itself. Your packaging provider works out your limit.

Why does packaging lower your payslip but not your income?

The packaged amount comes out of your pay before tax, so your taxable income and your payslip both look lower. You still receive the money: it is paid towards costs such as rent, mortgage repayments or bills, through a card or account the packaging provider sets up. A lender reading only the payslip can miss that money altogether.

How do lenders treat packaged income?

Three ways lenders count a salary package
Approach What it means for you
Taxable pay only The packaged amount adds nothing to your assessed income
Grossed up as salary The packaged amount counts, but is taxed as if it were ordinary pay
Added back as tax-free income The full packaged amount counts as take-home pay

Some lenders also cap how much packaged income they will count, or only count it once you have been packaging for a set period. Lender policy here changes, so it is worth checking at the time you apply rather than relying on what a friend was told last year.

A worked example: one package, three answers

Take a nurse at a public hospital who packages $8,000 a year, inside the cap. That is about $667 a month. On a simple surplus test at an assessment rate of 9% (the 6% example rate plus the 3 percentage point buffer) over 30 years:

Extra borrowing power from an $8,000 package
How the lender counts it Extra monthly income counted Extra borrowing power, about
Taxable pay only $0 $0
Grossed up as salary, taxed at 30% plus the 2% Medicare levy $453 $56,300
Added back as tax-free income $667 $82,900

The 30% rate applies to taxable income between $45,001 and $135,000. Real lender calculators make other adjustments too, but the gap between the first and last rows is the point: choosing the lender can be worth more than the package itself when you borrow. The borrowing power calculator gives a starting figure on your own numbers.

What documents prove salary packaging?

  • Recent payslips showing the packaged deductions.
  • A letter from your employer confirming your base salary and the packaging arrangement. The employer letter template sets out what lenders look for.
  • A statement from the packaging provider showing what has been packaged this year.
  • Your income statement in myGov. If the taxable value of your fringe benefits is over $2,000 in an FBT year (1 April to 31 March), it shows a reportable fringe benefits amount, grossed up.

Does a novated lease count the same way?

No. A novated lease is a car lease paid through your pay, so it reduces your take-home pay rather than adding to it. Lenders either read the lower pay on your payslip or count the lease payment as a monthly commitment. Either way it reduces what you can borrow, so check the effect before you sign a new lease in the year you plan to buy.

Should you change your package before applying?

Possibly, but check first. If your lender counts only taxable pay, packaging more lowers your assessed income. If your lender adds packaging back as tax-free income, packaging more can help. The right order is to choose the lender, then decide on the package, not the other way around.

What happens if you change jobs?

The package usually ends when you leave an eligible employer, so your take-home pay changes even if your salary does not. If you are moving from a public hospital to a private one, or from a charity to a business, tell the lender before approval: it assesses the income you will have, not the income you had. Moving between two eligible employers usually keeps the package, but the new payslips and a fresh employer letter will be needed.

Who gets the most from this?

Nurses, doctors and allied health staff in public hospitals, paramedics and people working for charities and public benevolent institutions. Many also have overtime, penalty rates or allowances, which lenders treat in their own ways; the guide to employment and income home loans covers how each kind of pay is assessed. The general picture of who qualifies is in home loan eligibility and requirements.

Questions people ask

Do all lenders count salary packaging?

No. Some count only your taxable pay, some gross it up and some add it back as tax-free income. The difference on one package can be tens of thousands of dollars of borrowing power.

Does salary packaging affect HECS-HELP repayments?

Yes. Reportable fringe benefits are part of the repayment income used for HELP, so packaging does not reduce your compulsory repayment the way it reduces taxable income. The HECS-HELP guide covers how lenders assess it.

Can I use salary packaging to pay my mortgage?

Many hospital and charity packages allow mortgage repayments from the packaged amount, within the cap. Your packaging provider sets the rules.

Charles Touma works with hospital, ambulance and charity staff and knows which lenders count packaged income in full. A free 30-minute call covers your payslips, your package and the lenders that suit them. General information only, not tax, financial or credit advice. Sources: ATO, FBT exempt organisations and capping thresholds; ATO, reportable fringe benefits for employees, checked 17 October 2026. Example figures use the 6% example rate plus a 3 percentage point buffer over 30 years.

General information only, not credit, legal or tax advice. Your situation is assessed properly before any recommendation. Government scheme details change; figures are current at the time of writing.