Salary packaging reduces your taxable income — that part is real. But for HECS, the ATO doesn't use taxable income. It uses repayment income, and packaged amounts come back into it as reportable fringe benefits, multiplied by the Type 2 gross-up factor of 1.8868.
The classic case — a health or NFP worker on $80,000 packaging the full $9,010 cap:
| Line | Amount |
|---|---|
| Taxable income after packaging | $80,000 |
| Reportable fringe benefits ($9,010 × 1.8868) | +$17,000 |
| Repayment income for HECS | $97,000 |
| HECS repayment 2026-27 (on $97,000) | $4,121 |
| Extra repayment caused by the package | +$2,550 |
Worse: your employer usually withholds STSL based on your reduced cash salary, so the extra repayment often isn't collected during the year — it arrives as a tax bill in July. That's the "$2–3k out of pocket at tax time" story that fills the forums every year.
→ Put your own numbers in — the calculator shows the grossed-up amount and the exact extra repayment your package causes.
Often yes — the income tax saved can exceed the extra HECS repayment, and the repayment isn't lost money (it reduces your loan). But you should decide with both numbers in front of you, not just the packaging provider's brochure.
Same mechanism: the lease's fringe benefit value is grossed up into repayment income. Ask your provider for the reportable fringe benefits amount and enter it directly in the calculator.
Salary-sacrificed super is added back as reportable super contributions. It's still one of the best tax moves available — it just doesn't reduce your HECS assessment base.
Ask payroll to withhold additional amounts, or set the money aside yourself. The refund estimator shows the gap between what's being withheld and what will be assessed.