Charity salary packaging and how it compares to award wages

What is charity salary packaging?

Charity salary packaging is a tax concession that lets employees of certain not-for-profit organisations pay for work-related or personal expenses with pre-tax income. Instead of paying tax on that part of your salary, the money goes directly to the expense – for example, rent, mortgage, or a car. This reduces your taxable income and can boost your take-home pay.

It is important to understand that salary packaging does not change the gross wage you earn. Your award or agreement still sets your minimum pay. Salary packaging simply changes how much tax you pay on that wage. For many charity workers, this can make a significant difference, especially if you are on a lower or middle income.

Awards versus the national minimum wage

Australia has a national minimum wage, set by the Fair Work Commission. From 1 July 2026, it is $26.44 per hour, or $1,004.90 per week. That annualises to $52,255, which gives an index of 48.2 on the Salary Index. The index is a simple way to see where a pay figure sits against the national line of 100 (full-time adult ordinary-time earnings of $108,352 per year).

But most workers are not on the national minimum wage. They are covered by a modern award, which sets higher minimum rates for specific industries and roles. Award minima rose by 4.75% from 1 July 2026. For example, the entry-level award floor is $25.74 per hour – slightly below the national minimum wage? Actually, the national minimum wage is higher than that floor, but many award classifications pay above both.

Charity workers are often covered by the Social, Community, Home Care and Disability Services Industry Award (SCHADS). This award has multiple pay levels, from level 1 to level 8, with rates well above the national minimum. A full-time charity worker on SCHADS level 3, for instance, might earn around $28–$30 per hour. That annualises to roughly $58,000–$62,000, giving an index around 54–57. Still below the national line, but above the minimum.

How salary packaging interacts with award wages

Because salary packaging reduces your taxable income, it can make a lower award wage feel more valuable. Consider a charity worker earning $60,000 per year (index 55.4). Without packaging, they pay tax on the full amount. With packaging of $15,900, their taxable income drops to $44,100. That puts them in the 15% tax bracket (plus Medicare levy), instead of the 30% bracket. The result is a higher take-home pay, even though the gross wage hasn't changed.

This is especially relevant when comparing award wages to the national minimum wage. A worker on the national minimum wage ($52,255) cannot salary package unless their employer offers it – and most minimum-wage jobs are not in the charity sector. A charity worker on an award wage of $60,000 with packaging may end up with more after-tax income than someone on the minimum wage, even though the gross difference is only about $7,700.

State and industry context

Your location also matters. The states page shows that average earnings vary across Australia. For example, the ACT has an index of 109.9 ($119,090 annualised), while Tasmania is 88.6 ($96,008). Charity workers in high-cost areas like the ACT or NSW (index 101.2) may find salary packaging even more valuable because it reduces taxable income in a higher tax bracket.

Industry benchmarks also give perspective. The industries page shows that health care and social assistance (which includes many charity roles) has an index of 97.8 – close to the national line. But that is an average across all roles, not just charity workers. Individual charity jobs may be below that average.

Tax and super considerations

Salary packaging does not affect your super guarantee. Your employer must still pay 12% super on your ordinary-time earnings (the gross wage before packaging). The super guarantee maximum contribution base for 2026–27 is $270,830, so most charity workers are well under that.

Tax rates for 2026–27 (resident, excluding Medicare) 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; 45% above $190,000. The Medicare levy is an extra 2%. Salary packaging reduces your taxable income, so you may drop into a lower bracket. This is the main benefit.

Practical example

Imagine a charity worker in Victoria (state index 98) on the SCHADS award, level 4, earning $65,000 per year (index 60.0). They salary package $15,900 for rent and bills. Their taxable income becomes $49,100. Tax on that (using 2026–27 rates) is about $5,365 plus Medicare levy $982, total $6,347. Without packaging, tax on $65,000 would be about $11,467 plus Medicare $1,300, total $12,767. The packaging saves them over $6,400 in tax. Their take-home pay rises from about $52,233 to $58,653 – a 12% increase.

This example shows why charity salary packaging matters when comparing award wages to the national minimum wage. A worker on the minimum wage ($52,255) cannot access this benefit, so their take-home is about $44,000 after tax. The charity worker with packaging takes home nearly $59,000 – a clear advantage.

Where to learn more

For more on how pay figures compare, see how the index works. If you want to check your award, visit pay guides for links to Fair Work Ombudsman resources. And for a broader view of salary trends, explore topics.

Remember, charity salary packaging is a valuable tool, but it does not replace the need for fair award wages. The national minimum wage and award rates set the floor. Packaging helps you keep more of what you earn.