Contents
- What Is Salary Sacrifice into Super?
- How Much Can You Salary Sacrifice? The 2025–26 Concessional Cap
- Tax Savings by Income Level
- How to Set Up Salary Sacrifice
- The Carry-Forward Rule: Use Unused Cap Space
- Division 293 — High Income Warning
- Is Salary Sacrifice Worth It?
- What Salary Sacrifice Affects Beyond Your Tax Bill
- Common Mistakes With Salary Sacrifice
- Salary Sacrifice or Personal Deductible Contribution?
- Summary
- Frequently Asked Questions
What Is Salary Sacrifice into Super?
Salary sacrificing into superannuation means redirecting part of your pre-tax salary directly into your super fund instead of receiving it as income. The key benefit: contributions are taxed at 15% inside the fund rather than your marginal tax rate (which could be 30%, 37%, or 45%).
How Much Can You Salary Sacrifice? The 2025–26 Concessional Cap
The total concessional (pre-tax) contributions cap for 2025–26 is $30,000. This includes:
- Your employer's Superannuation Guarantee (SG) contributions (12% of salary)
- Your salary sacrifice contributions
- Any personal deductible contributions you make
If your employer pays $12,000 SG (12% of $100,000), you can sacrifice up to $18,000 more before hitting the $30,000 cap.
Tax Savings by Income Level
| Annual Salary | Marginal Rate | Super Tax | Saving per $1,000 | Max Extra Saving* |
|---|---|---|---|---|
| $45,001–$135,000 | 30% | 15% | $175 | ~$3,150 (if room) |
| $135,001–$190,000 | 37% | 15% | $220 | ~$3,960 |
| $190,001+ | 45% | 15% | $300 | ~$5,400 |
*Before Div 293 tax for incomes over $250,000. Max extra saving assumes full use of remaining cap space after employer SG.
🦘 Calculate Your Super Savings
See exactly how much tax you save with salary sacrifice and your projected super balance at retirement.
Super Contributions Calculator →How to Set Up Salary Sacrifice
- Check with your employer — Not all employers offer salary sacrifice arrangements. Ask your HR or payroll team.
- Complete a salary sacrifice agreement — This must be done before the income is earned, not after. You cannot salary sacrifice income you've already received.
- Nominate your super fund — Contributions go to your chosen fund (or your employer's default fund).
- Review your payslip — Check that the sacrificed amount appears as a super contribution and your gross taxable income has reduced.
The Carry-Forward Rule: Use Unused Cap Space
If your super balance is under $500,000, you can carry forward unused concessional cap space from the previous 5 years. This means if you contributed less than $30,000 in prior years, you may be able to make a larger one-off contribution now.
This is particularly useful for people who took time off work, had lower incomes in previous years, or have recently received a bonus or windfall.
Division 293 — High Income Warning
If your income plus concessional contributions exceed $250,000, the ATO charges an additional 15% tax via a Division 293 assessment, bringing the effective tax rate on super contributions to 30%. While this is still lower than the 37% or 45% marginal rate, it reduces (but doesn't eliminate) the benefit.
⚠️ Division 293 Calculator
Check if Division 293 applies to you and calculate your additional super tax liability.
Division 293 Calculator →Is Salary Sacrifice Worth It?
For most Australians earning above $45,000, salary sacrifice into super is one of the most tax-effective strategies available. Consider these factors:
- Yes, do it if you have room under the cap and won't need the money before retirement
- Consider carefully if you have high-interest debt — paying off a credit card at 20% interest may give a better return than super tax savings
- Be cautious if you're close to the preservation age and may need liquidity soon
- Check your life stage — super is locked until you reach preservation age (60 for most people born after 30 June 1964)
What Salary Sacrifice Affects Beyond Your Tax Bill
Most discussion of salary sacrifice stops at the tax saving. The arrangement quietly touches a number of other things, and some of them matter more than the tax.
Common Mistakes With Salary Sacrifice
Salary Sacrifice or Personal Deductible Contribution?
Since the rules changed to allow most people to claim a deduction for personal contributions, there are two ways to achieve broadly similar outcomes.
Salary sacrifice happens automatically through payroll, before the money reaches you. It requires an agreement with your employer and suits people who want the arrangement to run without further thought.
Personal deductible contributions are made from your own after-tax money, and you then lodge a notice of intent to claim a deduction with your fund and receive their acknowledgement before lodging your tax return. This offers flexibility — you can decide at year end how much to contribute — but it depends entirely on you completing the notice of intent correctly. Miss that step and the deduction is lost.
Both count toward the same concessional cap. Neither is universally better. The choice usually comes down to whether you value the automation or the flexibility.
Summary
Salary sacrifice redirects part of your pre-tax salary into superannuation, where it is generally taxed at a concessional rate rather than your marginal rate. Where your marginal rate is meaningfully higher, that difference is a real saving.
The costs are equally real: the money is locked away until preservation age, your borrowing capacity may fall, and the amounts remain reportable for several income tests. Watch the concessional cap carefully, because your employer's contributions count toward it.
This page provides general information only and is not financial or tax advice. Contribution caps, thresholds, and Division 293 rules change. Confirm current figures with the ATO and speak with a licensed financial adviser before making significant contributions.
Frequently Asked Questions
Does my employer's super guarantee count toward the concessional contributions cap?
Yes. The concessional cap covers all before-tax contributions, including compulsory employer super guarantee contributions, salary sacrifice amounts, and any personal contributions for which you claim a tax deduction. Many people exceed the cap because they forget to include the employer component.
Can I salary sacrifice money I have already earned?
No. A salary sacrifice arrangement must generally be entered into in writing with your employer before the relevant income is earned. Sacrificing salary that you have already become entitled to does not achieve the intended tax treatment.
Does salary sacrifice reduce my HECS-HELP repayment?
Generally no. Salary sacrificed super contributions are usually reportable and are included in the repayment income used to calculate compulsory HECS-HELP repayments. The same applies to the Medicare levy surcharge income test.
Will salary sacrificing affect my ability to get a home loan?
It can. Lenders assess your capacity to service a loan based on your income. Reducing your assessable salary through salary sacrifice may reduce the amount a lender is willing to advance, so it is worth reviewing the arrangement before applying for finance.
What is Division 293 tax?
Division 293 is an additional tax on concessional superannuation contributions that applies where your income for surcharge purposes exceeds a defined threshold. It reduces, but does not usually eliminate, the tax advantage of concessional contributions for higher income earners.
Can I access salary sacrificed super early?
Generally no. Superannuation is preserved until you reach your preservation age and meet a condition of release. Limited early access exists in specific circumstances such as severe financial hardship or on compassionate grounds, subject to strict criteria.