NSW Health salary packaging and Child Care Subsidy

If you work for NSW Health and use salary packaging, the amount shown on your income statement can affect Child Care Subsidy, HELP repayments and Medicare Levy Surcharge. The confusing part is how NSW Health's 50/50 share of tax savings interacts with RFBA and Centrelink's CCS income rules.

For many NSW Health employees:

• salary packaging reduces taxable income
• the package creates a reportable fringe benefits amount, or RFBA
• NSW Health may share in the tax saving
• Centrelink adjusts exempt-employer RFBA differently for Child Care Subsidy
• HELP repayment income and Medicare Levy Surcharge income can use the full RFBA

The most important point:

The NSW Health 50/50 share affects the benefit you personally keep. It does not reduce the RFBA created by your salary packaging amount.

On this page

• How the NSW Health 50/50 share works
• What RFBA means
• How Centrelink adjusts RFBA for CCS
• Why HELP and Medicare Levy Surcharge are different
• What to check on your payslip
• FAQs

Why NSW Health salary packaging is different

NSW Health employees can access salary packaging because NSW Health is an eligible public hospital employer. Salary packaging lets eligible employees use pre-tax salary for approved expenses, which can reduce taxable income and improve take-home pay.

But NSW Health salary packaging has an extra layer. In many cases, tax savings are shared between the employee and NSW Health.

That means a calculator needs to separate two things:

1. The income-tested impact

This includes taxable income, RFBA, CCS adjusted taxable income, HELP repayment income and MLS income.

2. The personal benefit

This is the tax saving the employee actually keeps after any NSW Health share and admin fees.

Those two things are related, but they are not the same.

What can NSW Health employees salary package?

Eligible NSW Health employees can generally salary package:

• Living expenses: up to $9,010 per FBT year
• Meal entertainment: up to $2,650 per FBT year

The FBT year runs from 1 April to 31 March, not 1 July to 30 June.

For current caps and approved benefits, check HealthShare NSW, SalaryPackagingPLUS or your employer.

How the NSW Health 50/50 share works

The NSW Health share arrangement is about the tax saving, not the salary packaging amount itself.

A simple way to think about it:

Under the standard NSW Health arrangement, many employees are on a 50/50 share, while some award groups and confirmed arrangements differ. This means the estimated tax saving is shared between the employee and NSW Health.

Example:

If packaging creates a $2,000 tax saving:

• Employee share at 50%: $1,000
• NSW Health share at 50%: $1,000

This affects the benefit you personally keep. It does not halve the RFBA.

Eligible HSU-covered award employees and the 100% arrangement

Some NSW Health employees have a different arrangement.

For eligible NSW Health employees covered by relevant HSU awards, the employee share of tax savings increased from 70% to 100% from 1 July 2024.

This does not mean every NSW Health employee receives 100% of the tax saving. Eligibility depends on award coverage and employment arrangements. If you are unsure, check your award, employer or salary packaging provider.

What is RFBA?

RFBA stands for Reportable Fringe Benefits Amount.

When you salary package with an FBT-exempt employer like NSW Health, the amount you package can appear on your income statement as a grossed-up RFBA.

RFBA is generally reported where the total taxable value of reportable fringe benefits is more than $2,000 in the FBT year. See the ATO's guidance on reportable fringe benefit amounts for more detail.

For NSW Health, the common full package is:

Using the current gross-up factor:

$11,660 x 1.8868 = about $22,000 estimated RFBA

For more on how reportable fringe benefits and CCS interact, see that guide.

Does the NSW Health 50/50 share reduce RFBA?

No.

This is the most common mistake.

The NSW Health share arrangement affects the tax saving you personally keep. It does not reduce the RFBA created by the salary packaging amount.

Example:

• Living expenses packaged: $9,010
• Meal entertainment packaged: $2,650
• Total packaged: $11,660
• Estimated RFBA: about $22,000

That estimated RFBA is based on the packaged amount, not on whether you personally keep 50%, 70% or 100% of the tax saving.

How Centrelink adjusts RFBA for CCS

Child Care Subsidy uses CCS adjusted taxable income, but Centrelink does not always use the full RFBA for exempt employers.

For CCS and other family assistance income tests, exempt employer RFBA is adjusted using this formula (see the DSS Family Assistance Guide):

Centrelink-adjusted exempt employer fringe benefits total = exempt employer RFBA x (1 - FBT rate)

With a 47% FBT rate, that means:

RFBA x 0.53

So if your estimated RFBA is about $22,000:

$22,000 x 0.53 = about $11,660

That brings the Centrelink-adjusted RFBA back close to the original cash value of the package.

What this means for Child Care Subsidy

For CCS, the relevant figure is your adjusted taxable income, or ATI.

A simplified version is:

Taxable income after packaging
+ Centrelink-adjusted exempt employer RFBA
+ reportable super and other ATI items
= CCS adjusted taxable income

For many NSW Health employees using the standard exempt-employer caps, the CCS income effect may be smaller than the estimated RFBA figure suggests, because Centrelink adjusts exempt-employer RFBA for family assistance income tests.

Example:

For the packaged amount itself, this can roughly bring the CCS income figure back toward the original gross salary position. Other items, such as reportable super, partner income, admin fees and income changes, can still change the final CCS estimate.

See CCS income thresholds for the rate steps that apply to your income.

HELP repayments and Medicare Levy Surcharge are different

The Centrelink 0.53 adjustment is important for CCS and some family assistance income tests.

But it does not mean every income test uses only 53% of your RFBA.

HELP repayment income and Medicare Levy Surcharge income can use the full RFBA, rather than the Centrelink-adjusted RFBA used for CCS-style family assistance calculations.

That means salary packaging can be close to neutral for CCS in some cases, while still affecting:

• HELP repayment income
• Medicare Levy Surcharge income
• child support income tests
• other income-tested calculations

This is why a salary packaging and CCS calculator should not only show take-home pay. It should also show income-tested impacts across CCS, HELP and MLS together.

NSW Health salary packaging example

Let's say you are a NSW Health employee and package the full living expenses and meal entertainment amounts.

Estimated RFBA:

$11,660 x 1.8868 = about $22,000

Estimated Centrelink-adjusted RFBA for CCS:

$22,000 x 0.53 = about $11,660

If you are on the NSW Health standard 50/50 arrangement, your estimated net personal benefit is reduced because you share the tax saving with NSW Health.

If you are an eligible HSU-covered award employee on the 100% arrangement, your estimated net personal benefit may be higher because you may keep the full tax saving.

But in both cases:

• The estimated RFBA is still based on the packaged amount.
• The CCS adjustment is still based on the estimated RFBA.
• The 50/50 share does not halve the RFBA.

What to check on your payslip or income statement

To understand your real-world result, check:

1. How much you packaged for living expenses
2. How much you packaged for meal entertainment
3. Your salary packaging admin fee
4. Any NSW Health share of tax savings or employer share amount
5. Your RFBA on your income statement
6. Any reportable employer super contributions
7. Whether you have HELP debt
8. Whether your family has private hospital cover
9. Whether your Centrelink income estimate has been updated

Your salary packaging provider can confirm which NSW Health share arrangement applies to you.

Common mistakes

Mistake 1: Thinking 50/50 means half the RFBA

The NSW Health 50/50 arrangement relates to tax savings. It does not halve the RFBA.

Mistake 2: Using the full RFBA for CCS

For exempt employers, Centrelink adjusts RFBA for CCS and other family assistance income tests using the exempt-employer adjustment formula.

Mistake 3: Using the CCS-adjusted RFBA for HELP or MLS

HELP repayment income and Medicare Levy Surcharge income can use the full RFBA. Do not assume the 0.53 Centrelink adjustment applies to everything.

Mistake 4: Assuming all NSW Health employees are on the same arrangement

Many NSW Health employees may be on the standard 50/50 arrangement, but eligible HSU-covered award employees moved to a 100% employee share from 1 July 2024. Other groups may have separate arrangements.

Mistake 5: Forgetting reportable employer super

Reportable employer super contributions are generally added back for income-tested calculations, including CCS adjusted taxable income and HELP repayment income.

Use the NSW Health salary packaging calculator

CCS Checker's free NSW Health salary packaging calculator can estimate how NSW Health salary packaging may affect:

• CCS adjusted taxable income
• Child Care Subsidy rate
• out-of-pocket childcare costs
• income tax
• HELP repayment income
• Medicare Levy Surcharge risk

Select:

• Employer type: Public / NFP Hospital

Then choose the relevant NSW Health tax-saving share option:

• NSW Health standard 50/50 share
• Eligible NSW Health HSU-covered award employee, 100% employee share
• Custom confirmed share arrangement

FAQs

Does NSW Health salary packaging affect Child Care Subsidy?

It can. Salary packaging can reduce taxable income and create a reportable fringe benefits amount. For exempt employers like public hospitals, Centrelink adjusts exempt-employer reportable fringe benefits for CCS using the family assistance formula. The final CCS effect depends on your income, partner income, reportable super, fees, children in care and other circumstances.

Does the NSW Health 50/50 share reduce RFBA?

No. The 50/50 share affects the tax saving you personally keep. It does not halve the RFBA created by the salary packaging amount.

How much RFBA does $9,010 salary packaging create?

Using the current gross-up factor, $9,010 can create about $17,000 estimated RFBA.

How much RFBA does $9,010 plus $2,650 create?

A full package of $9,010 living expenses plus $2,650 meal entertainment is $11,660. Using the 1.8868 gross-up factor, this creates about $22,000 estimated RFBA.

Does meal entertainment count towards RFBA?

Yes, it can. NSW Health income statement examples commonly include the $2,650 meal entertainment amount in the full package example that creates about $22,000 estimated RFBA. Check your income statement or provider if unsure.

Do NSW Health HSU employees keep 100% of salary packaging savings?

Eligible NSW Health HSU-covered award employees moved from a 70% employee share to a 100% employee share from 1 July 2024. Eligibility depends on award coverage, so check your employer or salary packaging provider.

Does NSW Health salary packaging affect HELP repayments?

It can. HELP repayment income can use the full reportable fringe benefits amount rather than the Centrelink-adjusted RFBA used for CCS-style family assistance calculations.

Does NSW Health salary packaging affect Medicare Levy Surcharge?

It can. Medicare Levy Surcharge income can include reportable fringe benefits, so salary packaging may affect your MLS position if you do not have appropriate private hospital cover.

Should I update my Centrelink income estimate after starting salary packaging?

Usually, yes. If you receive CCS or other family assistance payments, you should keep your Centrelink income estimate up to date. Salary packaging can change taxable income and create RFBA, and Centrelink needs the correct information to estimate your entitlement.

Is NSW Health salary packaging worth it if I get CCS?

It depends on your income, partner income, childcare fees, HELP debt and NSW Health share arrangement. Salary packaging may improve take-home pay, but the RFBA can affect income-tested calculations. Use the calculator to estimate your own result.

What should I enter into Centrelink for NSW Health salary packaging?

Use the figures requested by Centrelink or shown on your income statement, including reportable fringe benefits where required. For exempt employer RFBA, Centrelink applies the family assistance adjustment for CCS. Check Services Australia or your salary packaging provider if unsure.

Related guides

• Salary Packaging & FBT Impact Calculator: model your NSW Health packaging impact on CCS, HELP and MLS
• How reportable fringe benefits affect CCS: how RFBA is counted for family assistance income tests
• What counts as Adjusted Taxable Income for CCS?: the full list of CCS adjusted taxable income items
• CCS income thresholds 2025-26: the CCS income steps and subsidy rates
• Salary packaging for hospital workers and CCS: how salary packaging and CCS works for Section 57A employers

Estimates only. Not financial or tax advice. 2025-26 FY rates. Consult your packaging provider and a registered tax agent for advice specific to your situation.