For most workers earning above $45,000, salary sacrifice into super is one of the most tax-effective ways to save. Money goes into super before income tax and is taxed at 15% in the fund, instead of your marginal rate of 30% or more plus the Medicare levy.
What $5,000 of salary sacrifice costs you
| Salary | Drop in take-home pay | Added to super (after 15% tax) | You come out ahead by |
|---|---|---|---|
| $60,000 | $3,325 | $4,250 | $925 |
| $90,000 | $3,400 | $4,250 | $850 |
| $120,000 | $3,400 | $4,250 | $850 |
2026-27, resident, no HELP debt.
When it makes sense
- You earn more than about $45,000, so your marginal rate is well above 15%.
- You do not need the money until retirement.
- You stay under the $30,000 concessional cap, including employer contributions.
When to be careful
- Low incomes: below $45,000 the tax saving is small.
- Short-term goals: super is locked away, except for the First Home Super Saver Scheme.
- HELP debt: salary sacrificed amounts still count towards your repayment income.
How to set it up
Ask your payroll team for a salary sacrifice agreement for future pay. Check that your employer still calculates the 12% super guarantee on your pre-sacrifice salary.
Salary sacrifice vs personal deductible contributions
If your employer does not offer salary sacrifice, you can make personal contributions from your bank account and claim a tax deduction by lodging a notice of intent with your super fund. The tax outcome is similar, but salary sacrifice gives you the benefit immediately in each pay.
Carry-forward contributions
If your total super balance is under $500,000, you can use unused concessional cap amounts from the previous five years. This is useful after a career break or in a year with a large bonus.
Division 293
If your income plus concessional contributions exceeds $250,000, an extra 15% tax applies to those contributions. Salary sacrifice is still usually worthwhile, but the saving is smaller.
Checking your employer’s contributions
Some employers calculate the super guarantee on your reduced salary after sacrifice. Your agreement should confirm that the 12% super guarantee is based on your pre-sacrifice salary.
First Home Super Saver Scheme
Voluntary super contributions, including salary sacrifice, can be withdrawn under the First Home Super Saver Scheme to buy your first home, up to set limits. This combines the tax advantage of super with a home-buying goal, but the rules and timing need careful attention.
Low income super tax offset
If your income is below about $37,000, the government refunds the 15% contributions tax on concessional contributions up to $500 a year, through the low income super tax offset.
Model it with the Australia pay calculator (salary sacrifice option) and read our superannuation guarantee guide.
A worked example of salary sacrifice into super
Take a worker on $90,000 who sacrifices $5,000 a year. Without the arrangement, that $5,000 would be taxed at 30% plus the 2% Medicare levy, leaving $3,400 in the bank. Through salary sacrifice into super, the full $5,000 goes to the fund and only 15% contributions tax is taken, so $4,250 is invested. The worker gives up $3,400 of take-home pay and gains $4,250 in super: $850 better off each year.
Spread over 26 fortnightly pays, $5,000 of salary sacrifice into super means about $131 less in each pay, for about $163 more in super.
Checklist before you start salary sacrifice into super
- Work out your cap room: the $30,000 concessional cap includes your employer’s 12% super guarantee. At $90,000, the guarantee is $10,800, which leaves $19,200 of room.
- Check for unused cap: if your total super balance is under $500,000, carry-forward amounts may give you more room.
- Get it in writing: the agreement should apply to future pay and confirm that the super guarantee is calculated on your pre-sacrifice salary.
- Keep a buffer: only sacrifice money you will not need before retirement, unless you plan to use the First Home Super Saver Scheme.
Common mistakes
- Going over the cap: forgetting to include employer contributions can push you above $30,000, and excess contributions are taxed at your marginal rate (with a 15% offset).
- Sacrificing on a low income: below about $45,000 the saving is small, and the low income super tax offset may already refund the contributions tax.
- Not checking your statements: compare your payslips with your super fund transactions a few times a year.
Salary sacrifice into super is worth it for many people, but the right amount depends on your budget and goals. The Moneysmart guide to salary sacrificing super explains the rules, and a licensed financial adviser can help with larger amounts or Division 293.
Frequently asked questions
How is salary sacrifice taxed?
Contributions are taxed at 15% in your super fund instead of your marginal tax rate.
What is the concessional contributions cap?
$30,000 a year, including your employer’s super guarantee.
Can I access salary sacrificed super?
Generally not until you reach preservation age and retire, except under the First Home Super Saver Scheme.
Estimates for information only, not tax advice.
