How Meal and Entertainment Salary Packaging Affects Your Salary Index

What is meal and entertainment salary packaging?

Meal and entertainment salary packaging is an arrangement where your employer allows you to pay for certain meals and entertainment expenses from your pre-tax salary. This reduces your taxable income and increases your take-home pay. It is most common in the not-for-profit sector, including hospitals, charities, and educational institutions. The Australian Taxation Office (ATO) sets rules on what counts as an eligible meal or entertainment expense.

How does it relate to the salary index?

The Salary Index measures your gross ordinary-time earnings against the national line of $108,352 per year (index 100). This figure comes from the Australian Bureau of Statistics Average Weekly Earnings (May 2026). Meal and entertainment salary packaging does not change your gross earnings – it only changes how much tax you pay on those earnings. So your salary index remains the same whether you package $1,000 or $10,000 for meals.

For example, a registered nurse in a public hospital earning $85,000 gross has a salary index of about 78.4. If she packages $5,000 for meals and entertainment, her taxable income drops to $80,000, but her index stays at 78.4 because the index uses the $85,000 gross figure. Her take-home pay increases because she pays less tax.

Who offers meal and entertainment salary packaging?

Employers in certain industries are more likely to offer this benefit. The industries page shows that health care and social assistance has an index of 97.8, and education and training has an index of 105.5. Many public hospitals, universities, and not-for-profit aged care providers offer salary packaging including meal and entertainment. In contrast, retail trade (index 75.9) and accommodation and food services (index 72.5) rarely offer it.

How does it affect your net pay?

To understand the net benefit, consider the tax brackets for 2026–27. A resident earning $80,000 taxable income pays:

• Nil on first $18,200
• 15% on $18,201–$45,000
• 30% on $45,001–$80,000 Plus 2% Medicare levy.

If you package $5,000 for meals, your taxable income drops to $75,000. The tax saved is roughly $1,500 (30% of $5,000) plus $100 Medicare levy (2% of $5,000), so you keep an extra $1,600. Your gross salary index remains the same, but your net pay improves.

What about awards and super?

Meal and entertainment packaging does not affect your award rate or minimum wage. The national minimum wage from 1 July 2026 is $26.44 per hour, $1,004.90 per week (index 48.2). Award minima rose 4.75% from that date. Your super guarantee is calculated on your ordinary-time earnings, which is usually your gross salary before packaging. The super rate is 12% from 1 July 2026, with a maximum contribution base of $270,830. So packaging does not reduce your super.

State and territory differences

The salary index varies by state. For example, the states page shows NSW index 101.2, Victoria 98.0, Queensland 97.9, Western Australia 106.9, and Tasmania 88.6. If you work in a state with a higher index, your gross pay is likely higher relative to the national line. Meal and entertainment packaging is available in all states, but the tax benefit is the same because it depends on your marginal tax rate, not your location.

Common questions about the index and packaging

Does packaging change my index if my employer reports gross differently?

No. The ABS defines ordinary-time earnings as gross pay before any salary sacrifice. Your employer reports your gross salary to the ABS, so packaging does not affect the national statistics. Your personal index is based on that gross figure.

Can I package meals and entertainment if I earn below the tax-free threshold?

If your taxable income is below $18,200, you pay no tax, so packaging offers no benefit. However, most full-time workers earn above that. The national minimum wage annualised is $52,255 (index 48.2), well above the threshold.

Is meal and entertainment packaging capped?

Yes, the ATO caps the amount you can salary sacrifice for meal and entertainment under certain arrangements, especially in the not-for-profit sector. The cap is typically around $2,650 per year for meal and entertainment, but it can vary. Check with your employer or a tax adviser.

How to use the salary index with packaging

To see where your pay sits, calculate your index: divide your annual gross salary by $108,352 and multiply by 100. For example, $90,000 gross gives an index of 83.1. This is your position on the national line regardless of packaging. If you want to compare net pay, use the tax calculator on the Salary Index page. Remember that packaging increases your net pay but does not move your index.

For more on how the index works, see how the index works. For industry comparisons, visit industries. For state data, see states.