In-receivership private health group Healthscope is asking almost 20,000 staff to access a tax break worth up to $11,660 a year — and then give it 90 per cent of it.
Health Services Union (HSU) leader Kate Marshall said staff were shocked by the scheme, which could end up with taxpayers losing up to $200 million a year in foregone revenue.
“What Healthscope are proposing is literally taking money out of workers’ pockets to pay their billions of dollars’ worth of debt,” she said.
“It’s highly objectionable. We’ve never seen anything like this. It is astounding to us.”
“We see this — just pure and simple — as a tax rort.”
Kate Marshall says the proposed deal operates under the false pretence that it would be great for workers.
(ABC News: Darryl Torpy)
Public health staff across Australia have access to salary packaging
Salary packaging is a benefit that gives workers in not-for-profit organisations the ability to reduce their pre-tax income, meaning the amount of tax they pay is lower because their taxable income is assessed without the amount packaged out of it.
The longstanding scheme has been used by not-for-profit public hospitals to attract and retain staff. Employees are able to salary package up to $9,010 per year for general living expenses and $2,650 for meals and entertainment under a fringe benefits tax (FBT) exemption available to not-for-profit hospitals.
What for-profit company Healthscope wants is for its employees to access the benefit and then keep only 10 per cent of it, giving the broke company the bulk of the cash.
If the company’s nearly 20,000 employees accessed $10,000 of the benefit, it would cost taxpayers $200 million, of which employees would get just $20 million.
Collapse leads to radical changes
Healthscope’s lenders appointed lenders to run the private health network — Australia’s second largest — in May.
Its 37 hospitals continue to operate while the administrators try to find a buyer for part or all of the network, which is under a crushing amount of debt, reportedly $1.6 billion.
A plan to restructure the company as a charity is underway.
Chief executive Tino La Spina emailed staff a recent update about what he called “exciting developments”.
“You may have seen that the Australian Charities and Not-for-profits Commission has approved Healthscope’s application to register as a charity,” he wrote.
“This is a very important step and gives us huge confidence to move ahead as a For Purpose organisation.”
Becoming a not-for-profit entity will allow Healthscope to pay less tax, offer salary packaging and potentially keep the fledgling private hospital network alive.
In emails with staff, it has discussed a new not-for-profit entity called PurposeCo. The salary-packaging idea is just one way it is trying to negotiate the administration process and find a new buyer.
The national regulator of charities, the Australian Charities and Not-for-profits Commission (ACNC), declined to answer questions about the listing. The ACNC is subject to strict confidentiality provisions that prevent it from discussing applications.
In a statement, a spokesperson said: “By law the ACNC cannot speak publicly about the circumstances of any charity.”
The Australian Charities and Not-for-profits Commission says the charity’s effective date of registration was August 12, 2025.
HS PURPOSE TOPCO LTD was registered in August. In a governing document authored by law firm Arnold Bloch Leibler, the principal “object” of the company was described as:
“… provide relief from sickness, helplessness, suffering, misfortune, disability, distress and need by providing, and facilitating the provision of, medical and health care services to people in Australia.”
Partners at administrator McGrathNicol Jason Ireland, Katherine Sozou, Keith Crawford and Matthew Caddy are listed as directors and “responsible people” of the new entity. All were contacted for comment.
If a buyer is found, the administrators will transfer the directorships to the new owners.
Assistant Minister for Productivity, Competition, Charities and Treasury, Andrew Leigh says becoming a charity is not easy.
“The Australian Government expects charities to uphold the highest standards of integrity. Charitable status comes with responsibilities to act in the public interest,” he said in a statement.
“The Australian Charities and Not-for-profits Commission operates independently of government, but the rules are clear: charities must remain charitable, operate lawfully, and be run in an accountable and responsible way. Any organisation that breaches those obligations risks losing its charitable status and the trust of the public.”
Tax expert issues warning
Jason Ward, the principal analyst at the Centre for International Corporate Tax Accountability & Research (CICTAR), was blunt about Healthscope’s move to become a charity.
Jason Ward has rubbished Healthscope’s plan to take 90 per cent of a tax benefit accrued by individual workers. (ABC News: Daniel Irvine)
“This is a phoney use of a non-profit status in order to create private wealth,” he said.
“It absolutely makes no sense.
“This is a company that has over a trillion US dollars in assets and has mastered the art of profit-shifting and not paying its fair share on hugely lucrative investments in Australia.”
In late 2019, just months before the COVID-19 pandemic swept the globe, Canadian-based asset manager Brookfield snapped up the healthcare group for $4.4 billion. Brookfield then lumbered the hospitals with $1.6 billion in debt as it repatriated cash back to its head office.
“Brookfield has a history of essentially shifting profits on huge amounts of investments in Australia offshore, usually through Bermuda, sometimes the Cayman Islands,” Mr Ward said.
“This is a typical private equity playbook model, where they have sold out the real estate underneath it in order to finance the deal and loaded the company with tonnes of debt. So they made money during the process but left a shell of a company … littered in bankruptcy.”
Brookfield declined to comment.
Healthscope says changes necessary
In a statement, a spokesperson for Healthscope said the administration and receivership process curtailed its ability to comment.
“While a sale process is currently underway, an alternative not for profit model for Healthscope is being developed,” they said.
“As part of this, we are putting forward a salary packaging option that provides for both significant financial benefits to staff, while helping to support the viability of a not for profit Healthscope.”
The statement said the option being put to employees could give up to 40 per cent of the benefit to employees — if more than 90 per cent of staff took up the offer — “with a view that this would increase over time”.
‘Why should they be the ones to bail out Healthscope?’
Rebecca Sprekos, assistant secretary of the Health and Community Services Union (HACSU), said the salary-packaging proposal was worrying staff.
“They’re really distressed. They’re confused,” she said.
Rebecca Sprekos says health workers are reporting “fairly confronting and pushy” attempts by management to get them to agree to the proposal. (ABC News: Darryl Torpy)
“Members just think that it’s completely unfair. Why should they be the ones to bail out Healthscope and what’s happened to them financially?”
Ms Sprekos says staff were being told that if they did not sign up to the proposal they would lose their jobs and hospitals would close.
Figures provided by the Health Services Union provide examples of the scheme would work for a person earning $80,000 a year.
They would pay approximately $17,947 a year in income tax.
Without packaging, their take-home pay would be $62,053With packaging, under the “90 per cent to Healthscope” plan, they would get a $590 benefit, with take-home pay of $62,643If they got the full (100 per cent) benefit, they would get a $5,900 benefit with take-home pay of $67,953
Some jurisdictions, such as NSW, began packaging programs that returned a fraction to the institution to cover administration costs. That proportion has been wound back to zero, meaning employees get the full benefit.
In a recent email to staff, Healthscope’s chief executive back-tracked, suggesting a “three month ‘bonus’ period” of the arrangement would see the full benefit of salary packaging go to staff for a short time.
If only seven in 10 staff take up the proposal, 90 per cent of the benefit will continue to be returned to Healthscope. If more staff take it up — nine in 10 — then the take will progressively reduce to 40 per cent.
Tino La Spina has told staff the company wants “to give our people as much of the benefit as we possibly can, while also ensuring that our… plan is commercially viable”. (ABC News: Andrew Altree-Williams)
“It represents an exciting opportunity for us to give you a greater benefit in the short term,” Mr La Spina wrote in an email.
“And of course, we remain committed to progressively increasing the benefit share even further over the longer term, with the aim of returning 100% of the benefit to our people.”
A Victorian Healthscope worker, speaking anonymously due to restrictions on their ability to comment publicly, said the concept was “a shock” to colleagues.
“We knew Healthscope’s financial situation wasn’t great, but asking us to donate the majority of an entitlement intended for workers in an underpaid sector to pay off the company’s debts wasn’t something we expected,” they said.
“When I realised that Healthscope would take most of the benefit, I was appalled.”
“I’m outraged that Healthscope wants to use our benefits to bail themselves out of their own financial mismanagement. I think it sets a really dangerous precedent.
“Healthscope’s messaging is that this is our chance to be part of the ‘destiny’ and the ‘future’ of Healthscope, but this feels dishonest.”
Salary packaging has implications for things like HECS and Centrelink entitlements, so the potential $600 benefit could be outweighed by losses in individual circumstances.
Tax lecturer warns against spending $1 to save 30 cents
Taxation law expert Lisa Greig called it “a very unusual ‘scheme’ to say the least”.
“If it sounds too good to be true, then it is,” she added.
Ms Greig, who lectures for the Faculty of Business and Economics at the University of Melbourne’s business school, said schemes where employees put aside some of their salary to reduce tax were common.
But this was different, she said.
“The policy intent of having this exemption is for such entities to be able to attract and retain skilled staff compared to the private sector due to underfunding or workforce shortages,” she said.
“The mischief of this scheme is that I have never seen a 90 per cent administration fee in any salary sacrificing arrangement. That is a very significant clipping of a ticket.”
Ms Greig said workers should always get advice and warned against doing something just to get a tax benefit because there were costs to that.
Where to now?
Healthscope is still seeking buyers for the group.
Unions are urging staff to vote against a proposal that would allow the 90 per cent salary packaging deal. One of their key concerns is the potential spread of similar schemes.
“There’s a danger here of setting a very bad precedent,” Ms Marshall said.
“We know that the NDIS, for example, there’s a lot of money concerns there. What would happen if a disability provider went under and then decided, ‘Hey, we’ve got this model of what Healthscope’s doing. Let’s offer salary packaging and let’s take the majority of the benefit to get us out of debt.'”
“For us it’s a very dangerous precedent to be setting.”