How It Works
You ask your employer to redirect part of your pre-tax salary into your super fund. This amount is taxed at 15% inside super instead of your marginal tax rate. The higher your income, the bigger the saving.
| Your Marginal Rate | Tax Saving per $1,000 Sacrificed |
|---|---|
| 15% ($18,201–$45,000) | $0 |
| 30% ($45,001–$135,000) | $150 |
| 37% ($135,001–$190,000) | $220 |
| 45% ($190,001+) | $300 |
Practical Example
You earn $100,000. Your employer pays $12,000 in super guarantee. You have $20,500 of concessional cap space. If you salary sacrifice $10,000:
- Your taxable income drops to $90,000
- You save $3,000 in income tax (30% bracket)
- Your super pays $1,500 in contributions tax (15%)
- Net benefit: $1,500 — plus the money is growing in super
Your take-home pay drops by about $7,000, not $10,000 — because you would have paid $3,000 in tax anyway.
Watch the Cap
Your salary sacrifice plus employer super guarantee must stay under the $32,500 concessional cap (2026–27). If your employer pays $12,000 in SG, you can sacrifice up to $20,500 before hitting the cap.
HELP/HECS Warning
Salary sacrifice into super reduces your taxable income but does not reduce your HELP repayment income. Reportable super contributions are added back for HELP purposes. Don't salary sacrifice thinking it'll get you below the HELP repayment threshold — it won't.
Frequently Asked Questions
How do I set up salary sacrifice?
Ask your HR or payroll team. You'll typically fill out a form specifying how much extra you want contributed each pay cycle. There's no ATO form — it's an arrangement with your employer.
Can I access the money before retirement?
Generally no. Super is preserved until you reach preservation age (60) and meet a condition of release. Salary sacrifice should be viewed as a long-term decision.
Is salary sacrifice worth it on a low income?
Usually not if you're in the 15% bracket — since 1 July 2026 the marginal rate there equals the 15% contributions tax, so there's no tax saving at all. It becomes significantly more valuable from the 30% bracket upward.
Does salary sacrifice affect my super guarantee?
It shouldn't. Your employer should pay the 12% SG on your original salary, not your reduced salary. Check your super statements to make sure.