Salary packaging lowers your taxable income. HECS is not charged on taxable income — it is charged on repayment income, which adds your reportable fringe benefits back in.
And it adds them back grossed up by 1.8868. Package $15,900 and your income statement shows a reportable fringe benefits amount of $30,000. That is the number HECS sees.
On a $90,000 salary that turns a $3,070.80 repayment into $7,570.82 — an extra $4,500.02 you were probably not told about.
Rows are your taxable income after packaging. Columns are the amount packaged. Each cell is the additional compulsory repayment caused by the gross-up.
| Taxable income | Package $5,000 | Package $9,010 | Package $15,900 | Package $30,000 |
|---|---|---|---|---|
| $70,000 | $1,415 | $2,550 | $4,500 | $8,491 |
| $80,000 | $1,415 | $2,550 | $4,500 | $8,628 |
| $90,000 | $1,415 | $2,550 | $4,500 | $8,828 |
| $100,000 | $1,415 | $2,550 | $4,505 | $9,028 |
| $110,000 | $1,415 | $2,550 | $4,705 | $9,228 |
| $120,000 | $1,415 | $2,695 | $4,905 | $9,428 |
| $130,000 | $1,604 | $2,890 | $5,100 | $9,584 |
| $150,000 | $1,604 | $2,890 | $5,100 | $8,184 |
| $170,000 | $1,604 | $2,824 | $4,124 | $6,784 |
| $185,000 | $1,017 | $1,774 | $3,074 | $5,734 |
A dash means the gross-up doesn't lift you over the $69,528 repayment threshold. $9,010 and $15,900 are shown because they are the packaging amounts most commonly offered by employers; the maths is the same for any figure.
Extra HECS from packaging $15,900, by taxable income.
The gross-up is the part that surprises people, so it is worth knowing why it exists rather than just that it does.
Fringe benefits are paid out of pre-tax dollars. To show them on your income statement in a way that is comparable with salary, they are converted back to the pre-tax salary you would have needed to buy the same benefit after tax. That conversion is the gross-up factor. For benefits with no GST credit — the Type 2 rate, which is what appears as your reportable fringe benefits amount — the factor is 1.8868.
So the chain runs: you package $15,900 → your income statement reports $15,900 × 1.8868 = $30,000 → HECS adds that $30,000 to your taxable income → the repayment is worked out on the total.
The trap is that packaging is usually sold on the taxable-income side of that chain. Your provider shows you the tax you save on $15,900. Nobody shows you the $30,000 that lands in the HECS calculation, because it appears months later on a tax assessment rather than in the packaging quote.
Say your salary is $105,000 and your employer offers $15,900 of packaging.
That is roughly $2,115 of extra HECS in a year you thought you had lowered your income. The packaging still saves you income tax — usually more than this — but the two numbers belong in the same conversation, and normally only one of them is in the brochure.
Three things worth holding onto:
To put your own numbers in — including reportable super and investment losses, which are added the same way — use the repayment calculator, which itemises every component of repayment income.
This page quantifies the HECS side only. Whether packaging is worth it overall depends on the income tax you save, which depends on rates the ATO had not published for 2026-27 at the time of writing. Your packaging provider or a registered tax agent can model both sides for your situation.
Every figure on this page is computed at build time by the same engine that powers the calculators on this site — nothing is typed in by hand, so the tables cannot drift away from the tools. The engine is checked against the ATO's published thresholds by a golden test suite that fails the build if any figure moves unexpectedly.