What is salary sacrificing?
Salary sacrifice1 is when your employer puts part of your before-tax pay into your super fund instead of your bank account.
Salary sacrificing into super is in addition to the Superannuation Guarantee (SG) contribution that your employer makes. This extra contribution can help you grow your super and can reduce your income tax.
Please note, not all employers offer salary sacrifice.
Salary sacrifice benefits for employees
Reduce your tax liability
Reduce your tax liability
Lower your taxable income
Lower your taxable income
Build your retirement savings
Build your retirement savings
How salary sacrifice works
Work out how much you could contribute
Set up your salary sacrifice
Monitor your contributions
Is salary sacrifice right for you?
Some key considerations before deciding whether salary sacrificing into your super is right for you.
Understand your tax limits
Here’s a quick overview of contribution limits based on your income:
| Income | Before-tax contributions limit3 | Tax payable |
|---|---|---|
| Less than $250,000 per year | $30,000 per year | 15% |
| More than $250,000 per year2 | $30,000 per year | 30%2 |
Salary sacrifice and tax
When you salary sacrifice into super, you’ll generally pay 15% tax on the money contributed. If your total income plus before-tax contributions exceed $250,000, an additional 15% tax may apply2.
The cap on before-tax contributions is currently $30,000 per financial year. This includes:
- salary sacrifice contributions
- any super contributions your employer makes for you and
- any after-tax contributions you claim a tax deduction for.
Exceeding this concessional cap might result in additional tax charges.
Provide your Tax File Number (TFN)
Before you set up salary sacrifice, make sure you provide us with your tax file number (TFN). Failing to do so will result in your before-tax contributions being taxed at a 47% tax rate (including the Medicare levy). You don’t have to provide your TFN, but we can’t accept after-tax contributions without it. Log in to your account online to ensure we have your details up to date.
Other ways to grow your super
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Important information to consider
- Salary sacrifice may affect some Government benefits and employee benefits. We recommend you consider seeking financial advice before deciding if a salary sacrifice arrangement is right for you.
- If your adjusted taxable income (including your before-tax contributions) is more than $250,000 in a financial year, your before-tax contributions will be taxed at 30%, to that extent. This extra 15% tax is referred to as Division 293 tax. Find out more at ato.gov.au/tax-rates-and-codes/key-superannuation-rates-and-thresholds
- Carry-forward of unused concessional cap amounts may be available for unused potions of the concessional contributions cap from any of the previous five financial years if eligible and your total super balance (all super and retirement income funds) was less than $500,000 on 30 June of the previous financial year. See the Add to your super and retire with more fact sheet for full details.
- Before adding to your super, consider your financial circumstances, eligibility, contribution caps that may apply, tax issues and when your super can be accessed. We recommend you consider seeking financial advice.
- Before making a decision to combine your super, consider any fees or charges that may apply, and the effect a transfer may have on benefits in your other fund such as insurance cover. We recommend you consider seeking financial advice. If you wish to claim a tax deduction for personal super contributions, you must lodge a notice of intent to claim a tax deduction with your other fund before you combine your super.