What is salary sacrificing and how does it work?
When you “sacrifice” some of your salary, you make an agreement with your employer to pay it straight into your super account, instead of your bank account. This is an amount on top of your employer’s compulsory Superannuation Guarantee payment (9.5% of your salary).
It helps you save money in two ways:
You pay less tax
Salary in your super account gets taxed at 15% (if you earn less than $250,000) or 30% (if you earn more than $250,000). However, any salary you take home gets taxed at your usual income rate, which can be as high as 47%.
You reduce your taxable income
The more salary you put into your super, the smaller your taxable income may be – and that could mean even more savings at tax time.