Discover the tax benefits with Smart.
Salary packaging, also known as salary sacrificing, is a popular way for many Australians to reduce their taxable income and increase their take home pay.
You might have heard of people using it for things like superannuation contributions or leasing a new car. This often leads to a common question: can you also use a salary sacrifice arrangement for your mortgage repayments?
Salary packaging your mortgage payments could be a powerful way to manage one of Australia's biggest household expenses. After all, using pre-tax dollars to pay down your home loan could free up your post-tax income for other important things.
This article will explore whether you can salary sacrifice your mortgage in Australia. We'll explain how salary sacrificing works, who is eligible to package mortgage payments, and how you could get started.
Salary packaging is an arrangement, where you pay for certain expenses using your pre-tax salary, which lowers your taxable income. A lower taxable income means you pay less income tax, leaving more money in your pocket.
With salary packaging you can make your money work smarter.
Under a salary sacrifice agreement, your employer pays for certain expenses on your behalf directly from your pre-tax earnings. This is an Australian Taxation Office (ATO) approved way to structure your income.
Common items people may salary sacrifice, if eligible, include:
The answer is yes, but only for certain employees.
While many Australian workers cannot salary package their mortgage repayments, employees in specific industries are eligible for this benefit.
This is because the ATO provides special Fringe Benefits Tax (FBT) concessions to certain types of organisations, allowing them to offer a broader range of salary packaging benefits, including mortgage payments.
Generally, the option to salary sacrifice mortgage payments is available to employees working for:
Eligible employees in the not-for-profit sector (for example charities, and most aged care and disability workers) can package up to $15,900 each FBT year (1 April - 31 March) for everyday living expenses, which can include mortgage payments.
For eligible healthcare workers in public or NFP hospitals, this cap is $9,010 per FBT year.
For most other employees in the private sector, mortgage repayments are considered a private expense and cannot be salary sacrificed.
If you are an eligible employee, you can set up a mortgage salary packaging arrangement with a provider like Smart™. This process allows you to dedicate a portion of your pre-tax salary towards your home loan repayments.
Here’s how it typically works:
You just need to submit your claim once, and then you can start saving on tax.
One of the best ways to see the tax savings in action is to see an example. Consider this scenario for Barbara, who works in aged care for a not-for-profit provider.
Barbara earns $80,000 a year before tax and together with her partner, spend $20,000 a year in mortgage repayments^. Barbara is eligible for salary packaging up to the annual cap limit of $15,900 per year.
By salary packaging her mortgage, Barbara could see an increase of $5,088 to her disposable income each year. That’s extra cash in her take-home pay that could be used to ease the cost of living, or put away for additional savings or investments.
Like any financial decision, there are some benefits and considerations that should be understood before you salary sacrifice for your mortgage.
With salary packaging you can make your money work smarter.
Salary packaging your mortgage could be a smart way to reduce your taxable income and make home ownership more affordable. But it’s not always available to everyone or it may not suit your financial situation.
Whether you’re ineligible, your employer doesn’t offer it, or you’re simply exploring other options on top, there are several alternatives you may consider.
If you’re eligible to salary package your mortgage, it could be a powerful way to maximise your income.
By reducing your taxable income and covering your repayments with pre-tax dollars, you could enjoy significant savings over the life of your loan. It’s a smart way to help ease the pressure of home ownership.
Ready to make your money work harder for you? Get in touch with Smart today and find out how easy it is to get started.
This is general information only. Before entering into any salary packaging or novated leasing arrangement, you should consider your objectives, financial situation and needs, and obtain appropriate legal, tax, financial, or other professional advice based upon your own particular circumstances. This information is current as at December 2025.
^This saving example is for illustrative purposes only and is based on the income tax rates for the 2025/26 financial year. Your actual savings will depend on your income tax bracket, the GST processing method nominated by your employer, administration fees payable under your employer’s salary packaging plan and your personal circumstances. Before entering a salary packaging arrangement, you should obtain appropriate legal, financial or other professional advice.
* Smart may receive commission and/or administrative fees from Finspo, (as the case may be), in respect of any transactions that result from the referral.
The personal meeting mortgage health check is offered by Lab35 Pty Ltd trading as Finspo, Australian Credit Licence Number 521120. Any personal information provided to Finspo as part of the Mortgage Health Check will be held, stored and used in accordance with the Finspo Privacy Policy.
