If you work for a public hospital, a charity or an ambulance service, some of your restaurant bills and holiday accommodation could be paid with pre-tax dollars. That is meal entertainment salary packaging: a separate benefit on top of your normal salary packaging cap that lets you spend up to $2,650 a year on dining out and holidays before income tax touches it. For an employee on an $85,000 salary, using the full amount saves around $848 a year.
What Is Meal Entertainment Salary Packaging?
Salary packaging — also called salary sacrificing — lets your employer pay for certain expenses from your gross salary before it reaches you as cash. Because it comes out before income tax is calculated, your taxable income falls and you pay less tax.
Meal entertainment packaging applies that idea to food and drink with the character of entertainment, plus related accommodation and travel: restaurant meals eaten out with others, holiday accommodation, and venue hire for events. The ATO treats it as a distinct benefit with its own cap, separate from the general living-expenses cap.
The benefit is only genuinely tax-free when your employer is FBT-exempt. Fringe benefits tax (FBT), charged at 47%, is what an employer normally pays on a non-cash benefit; FBT-exempt employers can provide benefits up to a cap without paying it. For an ordinary private-sector employer, FBT would wipe out the saving entirely.
Who Can Access It?
Eligibility depends entirely on your employer, not your job title or salary. Around 1.54 million Australians work for charities, including nurses, doctors, allied health workers, aged-care and disability staff, ambulance officers and charity employees. Ask your payroll team or provider whether your employer offers it — it is only available if your employer has approved it.
| Employer type | General cap | Meal entertainment cap | FBT treatment |
|---|---|---|---|
| Public and not-for-profit hospitals, public ambulance services | $9,010 ($17,000 grossed-up) | $2,650 ($5,000 grossed-up) | Exempt up to the caps |
| Public benevolent institutions and health promotion charities | $15,900 ($30,000 grossed-up) | $2,650 ($5,000 grossed-up) | Exempt up to the caps |
| Other registered charities (rebatable employers) | $15,900 ($30,000 grossed-up) | About $2,650, concessionally taxed | 47% FBT rebate, capped at $30,000 grossed-up |
| Ordinary private-sector employers | Not available tax-free | Not available tax-free | Full FBT applies, so no saving |
Hospital and ambulance workers get a $9,010 general cap while charity workers get $15,900, yet both get the same $2,650 meal entertainment cap on top. Rebatable employers — charities that are not public benevolent institutions or health promotion charities — get a 47% rebate on FBT rather than a full exemption, so the benefit is less generous there. Caps are per employee, per employer, per FBT year: if both you and your partner work for eligible employers, you each get your own.
The $2,650 Cap Explained
The $2,650 figure is the amount of actual spending you can package each FBT year. The ATO publishes the cap as $5,000 grossed-up: dividing by the type 2 gross-up rate of 1.8868 gives $2,650. The same maths explains the general caps — $17,000 is about $9,010, and $30,000 is about $15,900.
The FBT year runs from 1 April to 31 March, unlike the income tax year (1 July to 30 June). Your cap resets every 1 April and is “use it or lose it”: if $1,000 is left unspent, you can generally only package $1,650 in the new year, and some providers return unspent funds to be paid to you as taxed salary. Use the balance before 31 March.
Most people package it as a regular deduction — the full $2,650 is about $101.92 per fortnight. You nominate the amount, your employer deducts it from your pre-tax salary, and the money is loaded onto your meal entertainment card or held for reimbursement. You can usually change the amount during the year with approval.
What Counts — and What Does Not
The ATO’s definition comes from section 37AD of the Fringe Benefits Tax Assessment Act 1986 and Taxation Ruling TR 97/17. Meal entertainment is food or drink that has the character of entertainment, plus accommodation or travel connected with it. A dinner with friends at a restaurant is clearly entertainment; a sandwich eaten alone at your desk is not — the ATO calls that sustenance.
| Usually claimable | Usually NOT claimable |
|---|---|
| Dining out with family or friends at a restaurant, café or bistro | Takeaway, home delivery and drive-through meals |
| Holiday accommodation (hotels, resorts, holiday rentals) | Groceries and everyday supermarket shopping |
| Venue hire for a function, such as a birthday or wedding reception | Meals eaten on your own, including a solo work lunch |
| Food and drink as part of a meal, including alcohol served with the meal | Alcohol on its own — buying liquor without a meal |
Two rules catch people out. First, you must be dining out with others — the benefit is for social meals. Second, the meal must be away from your employer’s premises: a meal at the hospital cafeteria where you work will not qualify. Your card will usually decline ineligible merchants automatically, but correct claiming is still your responsibility. A glass of wine with dinner is fine; a bottle shop purchase with no meal is not.
How It Works in Practice
Contact your employer’s salary packaging provider — large providers include Maxxia, SalaryPackagingPLUS, Smartgroup and CBB — and ask to add the benefit. You nominate an amount up to the $2,650 cap, your employer deducts it from your pre-tax pay, and you receive a dedicated meal entertainment card, typically a Visa debit card loaded with before-tax money.
Pay for the restaurant bill or hotel booking with the card and the funds come straight from your salary packaging account. Some providers also allow reimbursement: you pay first and submit the receipt via an app or claim form. Keep your receipts and, for venue hire, a record of the event and who attended, in case the ATO asks.
Watch the administration fees: one major provider charges $4.40 per month, or $52.80 a year. The fee is usually salary packaged itself, but it still comes off your saving, so ask for the full fee schedule before signing up.
Worked Example: How Much Tax Do You Save?
The saving is the packaged amount multiplied by your marginal tax rate plus the Medicare levy. Here is an employee on $85,000 a year packaging the full $2,650 at 2025–26 rates.
| Without packaging | With $2,650 packaged | |
|---|---|---|
| Taxable income | $85,000 | $82,350 |
| Income tax (2025–26 rates) | $17,088 | $16,293 |
| Medicare levy (2%) | $1,700 | $1,647 |
| Total tax and levy | $18,788 | $17,940 |
| Annual saving | — | $848 |
On $85,000, the tax is $5,088 plus 30% of $40,000. Packaging $2,650 cuts the tax by $795 and the levy by $53 — $848, exactly 32% of $2,650. Check the figures with a salary sacrifice calculator or model a salary of $85,000. Your saving depends on your bracket:
| Annual salary | Marginal rate + Medicare levy | Saving on the full $2,650 |
|---|---|---|
| $60,000 | 30% + 2% = 32% | $848 |
| $150,000 | 37% + 2% = 39% | $1,034 |
| $200,000 | 45% + 2% = 47% | $1,246 |
Even a full-time worker on the $26.44 minimum wage — about $52,245 a year for a 38-hour week — sits in the 30% bracket, so the full $2,650 is still worth $848 a year. Combined with the general cap, a hospital worker on $85,000 packaging $9,010 of living expenses plus $2,650 of meal entertainment shelters $11,660, saving about $3,731 a year before fees.
FBT and Reportable Fringe Benefits
Because your employer is FBT-exempt up to the cap, no fringe benefits tax is payable on the benefit itself. But the grossed-up value — $5,000 if you use the full cap — appears on your myGov income statement as a reportable fringe benefit, provided your benefits exceed $2,000 in taxable value for the FBT year.
Reportable fringe benefits are not added to your taxable income, so they do not directly increase your income tax. They do count in income tests for HELP repayment income, the Medicare levy surcharge, the private health insurance rebate, family assistance and child support. If you have a HELP debt, a higher repayment income can mean a larger compulsory repayment — worth checking before maximising every cap.
Limits and Gotchas
First, the use-it-or-lose-it FBT year: an unspent balance at 31 March can reduce what you may package in the new year, or be returned as taxed salary. Set a fortnightly amount you will realistically spend, and check your balance in February and March.
Second, check how packaging affects your super. The superannuation guarantee rate is 12% in 2025–26, but some employers calculate super on your reduced, post-packaging salary. If yours does, packaging $11,660 could cost about $1,399 a year in super. Many not-for-profits use your full pre-packaging salary — ask yours which method it uses.
Third, the benefit is only for your own social meals: you cannot claim meals you did not attend, or use the card for takeaway, groceries or everyday spending. Entertainment facility leasing shares the same $5,000 grossed-up cap, so the two are combined. Finally, this is not a tax deduction on your return — it works through payroll, so arrange it before you are paid, not at tax time.
Frequently Asked Questions
Who is eligible for meal entertainment salary packaging?
Employees of FBT-exempt employers: public benevolent institutions, health promotion charities, public and not-for-profit hospitals, and public ambulance services. Some other registered charities are rebatable employers and get a partial concession instead. Private-sector employees cannot access it tax-free, as their employer would pay FBT on it.
How much can I salary package for meal entertainment?
Up to $2,650 of actual spending per FBT year (1 April to 31 March), on top of your general cap. The ATO expresses it as $5,000 grossed-up — about $101.92 per fortnight. It is use it or lose it: unspent funds may reduce next year’s entitlement or be returned as taxed salary.
Can I claim takeaway or a meal on my own?
No. Takeaway, home delivery and drive-through meals are not eligible, and neither is a meal eaten on your own — the ATO treats a solo lunch as sustenance. You need to be dining out with others at a restaurant, café or similar venue.
Does it affect my HELP debt or government payments?
Potentially. The grossed-up value — $5,000 at the full cap — appears as a reportable fringe benefit. It is not added to your taxable income, but it counts in income tests for HELP repayments, the Medicare levy surcharge, the private health insurance rebate, family assistance and child support.
Is the $2,650 cap separate from the $15,900 or $9,010 cap?
Yes. The $2,650 cap sits entirely on top of your general cap — $15,900 for public benevolent institutions and health promotion charities, or $9,010 for hospitals and ambulance services. It only shares the cap with entertainment facility leasing, combined under the same $5,000 grossed-up limit.
Conclusion
Meal entertainment salary packaging is a small benefit with an outsized return: up to $2,650 of restaurant meals and holiday accommodation paid with pre-tax dollars, saving roughly $848 a year for most hospital and charity workers — and more than $1,200 a year for higher earners. It costs little beyond a modest monthly card fee. The catches are manageable: use the balance before 31 March, claim only genuine social meals, check how your employer calculates super, and note the reportable fringe benefits effect on HELP and other income tests.
If you work for an eligible employer and have not set this up yet, you are leaving money on the table. Ask your payroll team or provider to add the benefit, nominate up to $2,650 for the FBT year, and start paying for dinners out with pre-tax dollars. To see the saving on your salary, run your numbers through the salary sacrifice calculator and compare take-home pay before and after packaging.