You care for everyone else. Now it’s time to help yourself.

Salary sacrifice and you.

As an essential healthcare worker, you make a huge contribution to the community. So, isn’t it time you were rewarded for your hard work and sacrifice?

One way you can do that is through salary sacrifice. Also known as salary packaging or total remuneration packaging, salary sacrifice lets you use some of your before-tax salary to cover set expenses such as a car loan or childcare fees.

Because salary sacrifice deducts payments from your salary before you’ve paid tax on it, this reduces your total salary for tax purposes. This means your taxable income is lower, so you could pay less tax as a result. Salary sacrificing can make a difference to your take-home pay, especially if you’re on a higher salary, and it may take you into a lower tax bracket.

A special deal for health professionals.

It’s even better for some healthcare workers. The law allows eligible healthcare workers  to sacrifice up to $9,010 each year towards your mortgage repayments. Imagine how much faster you could pay off your mortgage as a result.

Am I eligible?

If you’re employed by a public, not-for-profit hospital, charity or other not-for-profit organisation, or you work for an ambulance service, you may be eligible to salary sacrifice part of your home loan repayments.

A woman sits in thought with a pen in her mouth, her laptop and financial documents, working out her budget.

Salary sacrifice and tax – an example

Jess is a nurse who earns an annual salary of $75,000, paying $14,842 in tax each year. This year, she decides to salary sacrifice $9,000 of her mortgage repayments from her before-tax salary.

This means that her before-tax salary is now $66,000, on which she pays $11,971.1 This means she saves $2,871 on tax each year.

Of course, everyone’s financial and tax situation is different – and salary sacrificing may not be appropriate for you. So, it’s important to seek professional advice before deciding to set up a salary sacrifice arrangement.

Two friends sitting in a a cafe looking at a mobile phone.

What else can you salary sacrifice?

Mortgage repayments aren’t the only thing health workers can salary sacrifice for. Depending on your employer, you may be able to arrange with your employer to salary sacrifice your:

  • car repayments
  • childcare fees
  • electronic device costs (such as laptops, smartphones or tablets)
  • health insurance premiums
  • super contributions.

Salary sacrificing your mortgage has other benefits.

Paying less tax can give your finances a boost. But there are plenty of other potential benefits of salary sacrificing towards your mortgage repayments.

  • Pay off your home loan faster: By salary sacrificing your mortgage, you could pay less tax, giving you more of your income to spend. You could also use this money to make extra mortgage repayments (if your loan contract allows). Depending on how much you pay and interest rates, this could shave years off your mortgage.
  • Pay less interest: The faster you pay down your mortgage, the more you could save on interest. 
  • Build your borrowing power: By salary sacrificing, you’re taking home more money, giving you the potential to build your savings. This could allow you to borrow more – and finally afford that dream home you’ve had your eye on.
  • Have more money to spend: Of course, just because you have extra money in your account, it doesn’t mean you have to spend it on your mortgage. It’s your money – so spend (or save it) how you want to. This may mean a well-earned holiday, a new car or building a rainy-day account.
  • Have one less payment to manage: Utilities, rates, insurance, education fees – keeping track of all your bills can take up your valuable free time. But if you choose to salary sacrifice your home loan repayments, your employer makes the payment on your behalf – giving you more time for yourself. 
A health professional wearing scrubs is sitting at a desk and smiling at the camera. A woman behind her is on the phone and a doctor in a lab coat is passing in the background.

Planning to be a home owner?

Did you know if you’re saving for your first home, you can sacrifice salary into the First Home Super Saver Scheme (FHSSS)? 

The scheme is offered through superannuation, giving you a tax-effective place to save towards a deposit on a home. You can sacrifice up to $15,000 each financial year in the FHSSS up to a total of $50,000 in total. 

 

Talk to us about your home loan needs

At Health Professionals Bank, we offer a range of flexible home loans for our members.

 

Talk to your workplace

Ask your employer or HR department if they offer salary sacrifice arrangements for home loans.

 

Get advice

Your accountant or tax adviser can look at your personal financial situation to make sure that a salary sacrifice arrangement will work for you.

FAQs

What’s the difference between salary packaging and salary sacrificing?

Salary sacrificing, salary packaging or total remuneration packaging are all the same thing – an arrangement between you and your employer to use some of your pre-salary income for specific expenses such as:

  • super contributions
  • car loans
  • childcare fees
  • health insurance
  • personal items such as computers and electronic devices

If you’re an eligible healthcare worker, you can also salary sacrifice to make extra mortgage repayments.

How could salary sacrificing help me?

By salary sacrificing some of your income, you could end up paying less tax. That’s because the amount you sacrifice comes out of your before-tax income. This reduces your taxable income – and therefore, the amount of income tax you pay.

You could spend the extra money any way you like – from paying off debts, saving for a rainy day, to renovating, buying a new car or boat or going on a holiday.

By salary sacrificing, your employer makes your payments for you. This can save you time and the hassle of paying bills.

If you decide to salary sacrifice to make extra mortgage repayments, this could help reduce your mortgage faster, saving you money and letting you own your home sooner.

 

Tell me more about salary sacrificing my home loan repayments.

If you work in the public healthcare sector and your employer offers salary sacrificing (also known as salary packaging) you’re entitled to salary sacrifice living expenses, like your mortgage repayments. This could help you pay off your mortgage faster – reducing the amount you owe more quickly therefore saving you money on interest payments.

Are there any downsides to salary sacrificing?

Once you’ve set up your agreement with your employer, the amount you’ve asked to sacrifice will be automatically deducted from your salary. This means you can’t access that money if you need it for something else such as an unexpected expense.

If you’re already in a low tax bracket, salary sacrificing may provide little or no savings on tax.

Salary sacrificing reduces your pre-tax salary. This means you may end up getting less super (because super is calculated as a percentage of your salary). This could have a negative effect on your retirement. It could also have an impact on benefits such as holiday loading and overtime.

Your employer may charge you a fee if you choose to salary sacrifice to cover the higher administration expense. Some employers may not offer salary sacrificing at all and others may only let you sacrifice a small amount, which may not be enough to cover the expense you’re salary sacrificing for.

Make sure you talk to your employer and understand exactly what’s involved if you salary sacrifice and how it could affect other benefits – or ask if you can negotiate. It’s also wise to talk to a tax adviser or accountant to make sure a salary sacrifice arrangement is appropriate for your situation.

Could salary sacrifice make it easier for me to get a home loan?

If you’re saving for your first home, you can sacrifice some of your salary into the First Home Super Saver Scheme (FHSSS). This scheme, which is offered through superannuation, lets you sacrifice up to $15,000 each financial year to a total of $50,000.

You can use this money towards a deposit on your first home. Remember though – if you change your mind, the money is in your super and you won’t be able to access it until you turn 65 or reach preservation age, under transition to retirement rules, or if you are in severe financial hardship.

Why don’t all employers offer salary sacrificing?

Some employers prefer not to offer salary sacrifice perhaps because they may need to pay a fringe benefits tax (FBT) for the benefits they offer you.

If you’re working for an employer in the healthcare sector, it may be exempt from FBT or could be eligible for an FBT rebate. However, it may be required to pay FBT on the amount you sacrifice as a mortgage repayment.

If you’re not sure, talk to your employer and ask if it offers this benefit – and whether this includes mortgage repayments as a salary sacrifice.

I work part-time/on a temporary contract. Can I salary sacrifice?

You can salary sacrifice if you are a permanent part-time employee and you pay tax, or you are hired on a temporary contract of three months or more.

I have a HELP/HECS debt. Can I salary sacrifice?

Yes, if the tax benefit you receive is more than the increased HELP/HECS debt you need to pay.

I receive family tax benefits from Centrelink. Can I salary sacrifice?

Salary sacrificing shouldn’t affect the amount of family tax benefit you receive. But make sure you let Centrelink know you’re salary sacrificing and you will have a reportable fringe benefit – a non-cash benefit that you get from working.

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