Salary Sacrifice into Super — How It Works and How Much Tax You Save

Salary sacrificing into superannuation is one of the most tax-effective wealth-building strategies available to Australian employees. On a $95,000 salary, sacrificing $10,000 can save $2,250–$3,200 in annual tax while dramatically boosting your retirement savings. Here's everything you need to know.

How Salary Sacrifice Works

You arrange with your employer to divert a portion of your before-tax salary directly into your super fund. This reduces your taxable income (you pay less income tax) and your super fund receives the contribution taxed at just 15% (the concessional rate) instead of your marginal rate.

Tax Savings at Different Income Levels — 2024–25

Salary	Marginal Rate	$5K Sacrifice Saves	$10K Sacrifice Saves	$20K Sacrifice Saves
$50,000	32.5% + 2% Medicare	$1,075	$2,150	$3,350*
$80,000	32.5% + 2% Medicare	$1,225	$2,450	$4,900
$100,000	32.5% + 2% Medicare	$1,225	$2,450	$4,900
$150,000	37% + 2% Medicare	$1,450	$2,900	$5,800
$200,000+	45% + 2% Medicare	$1,750	$3,500	$7,000

*At $50K, savings on the first $5K higher — rate boundary effect. Tax savings = (marginal rate − 15%) × sacrifice amount.

The Concessional Cap — Know Your Limit

Total concessional contributions (SG + salary sacrifice + personal deductible) cannot exceed $30,000 in 2024–25. On a $95,000 salary with SG at 11.5% ($10,925), you can salary sacrifice a further $19,075 before hitting the cap. Excess contributions above the cap are taxed at your marginal rate (losing the advantage) plus a charge.

How to Set Up Salary Sacrifice

Check your super fund accepts salary sacrifice — virtually all industry and retail funds do
Calculate your available cap space: $30,000 − (your salary × 11.5% SG) = your maximum sacrifice
Submit a salary sacrifice agreement to your employer — HR/payroll will have a form
Your employer redirects the agreed amount each pay cycle directly to your super fund
Your payslip shows reduced gross income — this is normal and correct
Review annually — especially if your salary changes

Carry-Forward Contributions — Catch Up If You've Fallen Behind

If your super balance is under $500,000, you can carry forward unused concessional cap space from up to 5 previous financial years. This means if you had $5,000 unused cap in each of the last 3 years, you could contribute an extra $15,000 on top of this year's $30,000 cap — for a total of $45,000 in a single year. Ideal for people returning from parental leave, long-term illness, or career breaks.

Salary Sacrifice vs Personal Deductible Contributions

Self-employed people and those whose employers don't offer salary sacrifice can make personal contributions to super and claim a tax deduction — achieving the same 15% concessional tax treatment. File an ATO "notice of intent to claim a deduction" before lodging your tax return. Both approaches are equally tax-effective; salary sacrifice simply automates the process through payroll.

See the Impact on Your Retirement Balance

Our super calculator shows exactly how salary sacrificing different amounts changes your projected retirement balance.

Project My Balance →

Does salary sacrifice affect my Age Pension? +

Your super balance is assessed under the assets test for the Age Pension once you reach Age Pension age (67). Salary sacrifice increases your super balance, which may reduce your pension entitlement if it pushes you above the asset test threshold. However, in the accumulation phase (before Age Pension age), your super is generally not assessed under the means test. This makes salary sacrifice particularly effective for younger workers and those well under the asset test thresholds.

Does salary sacrifice reduce my SG contributions? +

Potentially yes — and this is important to check. Some employers calculate SG on your reduced salary (after the sacrifice amount is removed), not your original salary. This is legally permissible unless your enterprise agreement or employment contract specifies otherwise. Always check how your employer calculates SG when setting up salary sacrifice to ensure you're not inadvertently reducing your employer's SG contribution.

What is Division 293 tax? +

Division 293 is an extra 15% tax on concessional super contributions for high-income earners (income + concessional contributions above $250,000). This effectively increases the tax on their super contributions from 15% to 30% — the same as their second-highest marginal rate. It doesn't eliminate the benefit of salary sacrifice but reduces it for very high earners. The ATO issues a Division 293 assessment after your tax return is lodged.

General information only. Tax strategies and contribution caps change regularly. Consult a licensed financial advisor or tax agent for advice specific to your circumstances. 2024–25 ATO rates apply.