Salary sacrifice 

Salary sacrifice is where you ask your employer to pay part of your before-tax salary into your super. These are known as concessional contributions. 

Here’s how it works:

1. You tell your employer how much you want to contribute each pay.
2. Your employer pays this on top of the legislated 12% super guarantee (SG) amount.
3. These contributions are made before your income tax is deducted, resulting in immediate tax benefits.

Top tip:  Stay under the before-tax (concessional) contribution cap of $30,000¹ to avoid paying extra tax.   

Let's see salary sacrifice in action

Meet Sally 

• Age: 30
• Income: $80,000 per year before tax 
• Current super balance: Around $80,000 
• She salary sacrifices $100 every fortnight into super.

If Sally retires at 67, she could have an extra $141,300² in her super account.

She’ll also have an estimated tax reduction of $832² per year. 

What are the pros of salary sacrifice?

• It reduces your taxable income, and potentially how much tax you pay.
• Making regular extra contributions to your super over time can make a big difference to your super balance, thanks to the power of compound returns.
• Automatic and regular contributions let your super grow without having to think about it.

Things to keep in mind

• Salary sacrifice contributions are subject to the annual before-tax (concessional) contributions cap of $30,000 per year. The concessional contribution cap also includes your employer SG contributions and personal deductible contributions.
• Salary sacrifice reduces your take-home pay, so consider your current budget before opting-in.

Personal contributions

If salary sacrifice isn’t the right move for you, personal contributions, also known as after-tax contributions, might be a good option.

What are the pros of after-tax contributions?

• You may be able to claim a tax deduction. This will change the contribution to a concessional contribution to reduce your taxable income.
• Earning less than $62,488 before-tax per year? You could be eligible for a government co-contribution.
• Your money will be invested in the tax-effective super environment, to help you build your retirement savings.

 Things to keep in mind 

• These contributions count towards your after-tax (non-concessional) contributions cap of $110,000 per year.²

See for yourself

Try our Spare change calculator to see how before tax or after-tax contributions can boost your super, and how they may change your take-home pay. 

Try the Spare change calculator