The basis of this is that hospital employees are exempt from 'Fringe Benefits Tax'. This is normally a tax on all rewards given to employees which do not form the cash component of their salary e.g. company car etc. Due to this special exemption for public hospital employees, there is the opportunity to 'sacrifice' some of your salary and receive it as fringe benefits, which is free from all forms of tax (including income tax).
The way this works in practice is that you designate a proportion of your income (up to a maximum of 30% of total salary in many hospitals) that is to be set aside for expenses including your household mortgage or rent, petrol expenses, household utility bills, computers, holiday travel, eating out at restaurants.
On showing the receipts for these items, you can receive your income to the value of these receipts free of tax.
Most doctors try to package the maximum amount and so receive a significant proportion of their income tax-free resulting in reducing their taxable income substantially.
In addition to packaging, most hospitals will give all doctors working in Australia the following benefits:
The bottom line is that compared to other rich countries—all of which pay Medicare rates or less for medical services—Australian doctors are pretty well paid.
Employee or contractor
Your tax and super obligations are different depending on whether your worker is an employee or a contractor.
Employees work in your business and are part of your business.
Contractors run their own business and provide services to your business.