What is the healthcare FBT cap?
Standard employees who salary sacrifice — including through a novated lease — trigger Fringe Benefits Tax (FBT) on the benefit they receive. For most employees, this means making post-tax Employee Contribution Method (ECM) payments to offset the FBT liability on non-EV vehicles.
However, the ATO grants a concessional FBT treatment to employees of certain organisations. Public hospitals, ambulance services, and some other health services are classified as public hospitals for FBT purposes, meaning their employees receive an annual FBT exemption cap of $9,010 per person. Separately, employees of organisations classified as Public Benevolent Institutions (PBIs) — charities and not-for-profits that provide direct relief to people in need — receive an even higher cap of $15,900 per person.
This cap means the first $9,010 (or $15,900) of salary packaging benefits per year is entirely FBT-free. Unlike private sector employees who must use ECM to offset FBT on non-EV car leases, healthcare workers can access this cap to further reduce their taxable income without any post-tax contribution — for non-EV vehicles as well as EVs.
Who qualifies for the healthcare FBT cap?
The $9,010 cap applies to employees of:
- Public hospitals (including most major state government hospitals)
- Public ambulance services
- Certain non-profit hospitals and day procedure centres
- Some other government health bodies
The $15,900 cap applies to employees of Public Benevolent Institutions (PBIs), which include:
- Registered charities that provide direct relief of poverty, sickness, or suffering
- Some aged care providers
- Hospice and palliative care services
- Disability support organisations
- Some community health centres
Not all healthcare employers qualify. Private hospitals, medical centres operated for profit, and GP practices are generally not eligible for the concessional FBT treatment. Always confirm your employer's FBT status with your HR or payroll team before assuming the cap applies.
How the $9,010 cap stacks with a novated lease
The FBT exemption cap is separate from — and stacks with — the EV FBT exemption. Here is how they interact for a hospital nurse leasing an EV versus a petrol car:
For healthcare workers leasing an eligible EV, the benefit is identical to the private sector — both get full FBT exemption. The real advantage of the healthcare cap shows for petrol and hybrid cars, where private sector employees must make post-tax ECM contributions that hospital employees avoid entirely (up to the cap).
Additionally, healthcare workers can use any unused portion of the $9,010 cap for other salary packaging benefits — meal entertainment cards, living away from home allowances, or other approved items. The novated lease sits within this overall cap, so a large novated lease may consume most of it.
Worked example — nurse at $80,000 salary, $55,000 EV, 3 years
Worked example — petrol car comparison (where the cap matters most)
This is where the hospital FBT cap makes the biggest real-world difference. A private sector nurse and a public hospital nurse both earn $80,000 and both lease a $55,000 petrol car. Here is how their outcomes differ:
On a petrol car, the hospital nurse saves approximately $3,700 more per year in year one compared to the same nurse working in the private sector. Over a 3-year lease, that difference compounds to over $11,000. This is why salary packaging is so heavily promoted by healthcare employers — the benefits genuinely are larger.
Salary packaging providers for healthcare
Most healthcare-specific novated lease providers understand the FBT cap structure and price their arrangements accordingly. Some providers specialise in healthcare salary packaging — RemServ, Maxxia, SmartSalary, and AccessPay are among the larger providers working with hospitals and health services. Your employer's HR department will typically have a preferred provider or a panel of approved providers.
Even with a preferred provider arrangement, you are generally entitled to get quotes from other providers and choose the most competitive one. The interest rate and admin fees still vary between providers, so comparing remains worthwhile even within healthcare-specific options.