Salary sacrifice

If you salary sacrifice your super contributions you could give your retirement savings a boost, pay less tax and potentially take home more pay.

What is salary sacrifice?

Salary sacrifice is when you and your employer agree to pay a certain amount of money into your super from your before-tax pay instead of paying that amount to you as salary. Standard member contributions and voluntary contributions can be made by salary sacrifice.

What are the benefits?

You don’t pay income tax on your salary sacrificed super contributions because they are coming out of your before-tax salary. Instead, these contributions are taxed at just 15%1, which is less than the tax rate most of us pay on income (which could be up to 49%2).

So, you generally pay less income tax and your take-home pay could increase. And of course, by adding the extra tax savings to your super you can help your retirement savings grow faster!

What else should I consider?

  • Generally, if your annual salary is less than $37,000 you may not benefit from the tax advantages of salary sacrifice. This is because your income tax rate isn’t much higher than the tax you would pay on any salary sacrificed super contributions.
  • Salary sacrificed amounts are not eligible for the Australian Government’s super co-contribution.
  • Any money you contribute through salary sacrifice counts towards your concessional contributions cap.

How do I get started?

Salary sacrifice is an arrangement between you and your employer so speak to your payroll area to find out how to get started.

Related downloads

1. An additional 15% tax applies to your before-tax contributions if your total annual income is more than $300,000 p.a.
2. This rate applies to those with an annual income of $180,001 or over and includes the Medicare Levy and Temporary Budget Repair Levy

The information about salary sacrifice above is general information only and does not take into account your personal objectives, financial situation or needs. You should consider taking financial advice tailored to your personal circumstances.