Salary sacrifice

If you’re a medium to high income earner, salary sacrificing some of your salary or wage into super could be a great idea.

(If you earn over $250,000 a year, we recommend you talk to a financial planner to see if salary sacrifice will work for you.)

What is salary sacrifice?

Salary sacrificing to super is when you and your employer agree to divert some of your pay to your super account. By 'sacrificing' some of your pre-tax salary and putting it into your super, you generally get taxed at the special rate of 15%. That's why it's also known as making 'concessional contributions' – because there are tax concessions on these types of contributions.

What’s in it for me?

Salary sacrifice can make your money work harder.

If you earn more than $37,000 a year, salary sacrifice can be a good way to grow your super. It involves giving up some of your take-home pay and putting it into your super fund instead. You generally save tax and boost your super.


How to start salary sacrificing

Salary sacrifice involves an arrangement between you and your employer to pay extra contributions to your super from your before-tax pay. To get started, you'll need to make arrangements with your employer. So to help you, we've prepared an email you can send straight to your payroll department. You may need to follow-up with them to find out if they’ve got any extra requirements.

Email your employer


 Just be aware…

Though many employers continue to pay your super guarantee (SG) on your full pay, your employer can decide to pay your SG on your reduced salary.

The minimum amount of super guarantee they must pay is based on your ordinary time earnings (OTE). OTE are generally what you earn for your ordinary hours of work. As entering into a salary sacrifice arrangement reduces your OTE, it may reduce the amount of super guarantee that your employer has to pay.

To make sure everything stays above board, it’s best to have a written agreement with your employer.


Watch out for caps

There are limits on the amount you can put into super each year by salary sacrifice without penalty. Salary sacrifice contributions are classed as 'concessional contributions' and also includes your employer's 9.5% contribution. Concessional contributions are limited to $25,000 each year, regardless of your age. For any amounts over these caps, you’ll pay extra tax.

Find out more about contribution caps.


Next steps

Find out more about salary sacrificing.

Can you afford your dream retirement lifestyle? Find out with our easy Retirement $ projector.