Salary sacrifice
Salary sacrifice is a simple way to add extra to your super from your pay before-tax. It can help you grow your balance over time – and you may pay less tax than if you took the money as salary.
What is salary sacrifice?
Salary sacrifice is when you ask your employer to pay part of your wages into your super before tax, on top of your Super Guarantee (SG).
These extra contributions are also known as:
- before-tax contributions
- concessional contributions
Because salary sacrifice contributions go into super before you receive them as income, they’re generally taxed at 15%.
What are the tax benefits of salary sacrifice?
If your annual income is above $45,000 and your tax rate is 30% or more, salary sacrifice could be a good way to boost your super contributions and reduce your taxable income at the same time. Watch video to learn more.
Example: Matt boosts his super and pays less tax1
Matt earns $65,000 before tax, excluding his employer’s super guarantee contribution. If Matt decides to redirect $5,000 of his pay into salary sacrifice super contributions, he will save $925 in tax, with the extra money going into his super fund.
| Matt’s income | Without salary sacrifice | With salary sacrifice |
| Gross salary | $65,000 | $65,000 |
| Less salary sacrifice to super | $0 | $5,000 |
| Less tax + Medicare levy | $11,295 | $9,620 |
| Take-home (net) pay | $53,705 | $50,380 |
| Matt’s Super | ||
| Employer super contribution | $7,800 | $7,800 |
| Plus salary sacrifice | $0 | $5,000 |
| Less contributions tax | $1,170 | $1,920 |
| Net super contribution | $6,630 | $10,880 |
In this scenario, Matt’s take home pay will drop by $3,325. He will save $1,675 tax on income and he will have an extra $4,250 in his super account.
1This example is illustrative only and does not guarantee an outcome. It is based on current rates and legislation, which are subject to change. A 15% tax applies to super contributions.
Super contributions calculator
See how much extra savings could have through making extra contributions to your super with our super contributions calculator.
Things to consider before salary sacrificing
Salary sacrifice won’t suit everyone. Here are a few things to keep in mind:
- If you earn less than $45,000, there may be no taxation benefit from salary sacrificing into super. You may be able to more effectively boost your super with a super co-contribution.
- Salary sacrifice contributions are counted under your concessional contributions cap. If you go over the cap, you may have to pay extra tax.
- When arranging to salary sacrifice with your employer, check that your SG contributions (and any other salary-based benefits) are being calculated from your pre-salary sacrifice income, and not your new (lower) taxable income.
- Salary sacrifice contributions can’t be used to reduce your SG contributions. For example, if you choose to salary sacrifice 5% of your salary to super, your employer must still pay the 12% SG rate plus the salary sacrifice amount.
- Generally, you’re not locked into a salary sacrifice arrangement and can start, stop, decrease or increase your contributions at any time.
- Since your employer is making the contribution for you, you can’t claim deductions or tax offsets for salary sacrifice contributions.
- A salary sacrifice contribution isn’t a fringe benefit and isn’t subject to fringe benefits tax.
Before-tax contribution caps
There are limits on how much you can contribute each financial year. These limits apply across all your super funds.
What are before-tax contribution limits?
The before-tax contributions cap for the 2026-27 financial year is $32,500
This cap includes:
- employer SG contributions, and
- any salary sacrifice contributions, and
- any personal contributions you claim a tax deduction for
Carry-forward rule
The carry-forward rule allows you to use unsed before-tax contribution cap amounts from the previous five years.
The current before-tax contributions cap is $32,500. If you didn’t use the full cap in any of the last five years, the leftover amount can be carried forward.
You are eligible to use the carry-foward rule if you have both:
- a total super balance of less than $500,000 at 30 June of the previous financial year
- unused concessional contributions cap amounts from up to 5 previous years
The unused concessional cap amounts you can carry forward depends on the amount you have contributed in previous years, starting from 2021-22.
Unused concessional caps amounts are automatically applied once you exceed the concessional caps for the year.
What happens if you exceed you concession contributions caps?
If you go over concessional cap limits after applying the unused cap limits form the carry-forward rule, you may need to pay extra tax.
If you think you are going to exceed your concessional cap limits for the financial year:
- stop or reduce any before-tax contributions before the end of financial year
- delay making any personal super contributions you intend to claim as a deduction in your tax return
If you need advice, get in touch with one of our Financial Advisers. They will help you work out how best to add more to your super.
How to set up salary sacrifice?
Contact the payroll team at your workplace to discuss putting a salary sacrifice arrangement in place.
We’d recommend getting all the details down in writing. That way, both you and your employer have a record you can check back against if you need to make any changes.
Simply complete the Contribution form and hand it to your employer to set up salary sacrifice.
Alternatively, you can discuss whether salary sacrificing may be appropriate for your circumstances with a First Super Financial Adviser at no extra cost. This service is covered by your membership fees.
We’re here to help, so give us a call
If you have any questions, please don’t hesitate to call our Member Services Team on 1300 360 988, or email us.