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.
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 $32,500 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.
Here’s a quick overview of contribution limits based on your income:
| Income | Before-tax contributions limit3 | CONTRIBUTIONS TAX PAYABLE |
|---|---|---|
| Less than $250,000 per year | $32,500 per year | 15% |
| More than $250,000 per year2 | $32,500 per year | 30%2 |
Provide your Tax File Number (TFN)
Providing your tax file number (TFN) is optional, but there can be consequences if you don’t. Without it, your before-tax contributions will be taxed at 47% (including the Medicare levy), and we won’t be able to accept any after-tax contributions.
Before setting up salary sacrifice, check if your TFN is on file and your details are up to date. You can do this by logging in to your account online.
Other ways to grow your super
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Disclaimers
- 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.