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Salary sacrifice

More super, less tax

What is salary sacrifice?

Salary sacrificing is a regular pre-tax contribution from your regular income into your superannuation and is taxed at the lower rate of 15% if your salary package is less than $250,000 per year. You choose how much you want transferred, and how often. Your employer then makes the transfer before you're paid - reducing your taxable income.

This gives you a tax benefit now and more money to enjoy in retirement. You can also salary sacrifice for other items such as a car.

How to salary sacrifice into super

Step 1. Ask your employer if they offer salary sacrifice arrangements. Not all businesses do.

Step 2. Look at your income and expenses, and work out how much of your income you can comfortably give up.

Step 3. Arrange to have your employer regularly redirect that amount of your wage to your super account instead of your bank account or pay check. This is usually as simple as sending an email to the payroll department, for example:


Re: Salary Sacrifice

Please deduct $XXX per month from my salary and send it to the same super fund as my super guarantee contributions.

Please also confirm this does not affect the employer super guarantee dollars that you are currently sending to the fund.

Thank you.

An example of salary sacrificing

Terry earns $7,500 per month and decides that he can comfortably live off just $7,000 of that. He therefore asks his employer to pay $500 from his salary each month into his super account as a salary sacrifice. This adds up to $6000 in 12 months!

At the end of the financial year, Terry's gross income is $90,000 but because $6000 has been salary sacrificed, only $84,000 is counted as assessable income and taxed at his regular tax rate. The $6,000 he's salary sacrificed is taxed separately at the concessional tax rate of just 15%.

Without salary sacrificing (2023/24)
  Amount Tax
Assessable income $90,000 $19,717
Salary sacrifice $0 $0
Total tax payable $19,717
With salary sacrificing (2023/24)
  Amount Tax
Assessable income $84,000 $17,677
Salary sacrifice $6,000 $900
Total tax payable $18,577

By salary sacrificing just $500 per month, Terry adds an extra $6,000 to his super in one year, and saves $1,140 in tax.

What are the tax benefits?

If your income, plus your before-tax super contribution is:

  • Less than $250,000 p.a. you pay 15% tax on your salary sacrifice contributions
  • More than $250,000 p.a. you pay 30% tax on your salary sacrifice contributions. 

It's worth noting though, if you earn below around $37,000 there may be very limited advantage in a salary sacrifice arrangement, so a Government super co-contribution may be a more effective way to boost your super.

Contribution calculatorSee the numbers

How much can I salary sacrifice?

  • In 2023/24, the annual cap for before-tax super contributions is $27,500 p.a. This includes:
  • The regular super contributions made by your employer (usually 11%)
  • Any salary sacrifice contributions, and
  • All personal contributions where you intend to claim a tax deduction.

So, you'll need to make sure that the total of all of these does not go above $27,500.

If you do want to add more to your super, you can also make after-tax contributions to take advantage of the higher contribution caps.

What about my employer's regular super contribution?

Your salary sacrifice agreement should be in addition to the compulsory Superannuation Guarantee. By law, your employer must not include any of your salary sacrifice into their mandatory super contributions.

But what if I can't afford to salary sacrifice?

This is not at all uncommon, but there are still clever ways to top up your super. Take a look at the find extra money for your super gadget and discover how little changes to your weekly spending, can add a lot to your super.

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