What's the difference between personal contributions and salary sacrifice?

Salary sacrifice (concessional contributions) and personal (non-concessional) contributions are two ways you can contribute money to super — both with their pros and cons. Understanding the differences between them is essential so you can make informed decisions when it comes to growing your super. 

Salary sacrifice

Salary sacrifice, also known as a type of before-tax contribution, is an arrangement between you and your employer where you agree for them to pay part of your before-tax salary into your super. You nominate how much you want to contribute each pay, and your employer will pay this on top of the legislated 11.5% super guarantee (SG) amount. These contributions are made before income tax is deducted, resulting in immediate tax benefits. Keep in mind, a before-tax (concessional) contribution cap of $30,000 applies¹ and there may be additional tax if you exceed your limit. 

For example, Sally is a 30-year-old earning an annual salary of $80,000 and has a super balance of around $80,000. She decides to salary sacrifice $100 a fortnight into her super. By doing this she could have an extra $141,300 in her super account at retirement. She’d also reduce her income tax by $897 per year and total tax bill by $507 per year.²

Pros of salary sacrifice

• Contributing from your before-tax salary reduces your taxable income, and potentially how much tax you pay.
• Making regular contributions to your super over time can make a big difference to your super balance.
• Automatic and regular contributions let your super grow without having to think about it.

Limits and caps

• Contributions made through salary sacrifice are subject to the annual before-tax (concessional) contributions cap of $30,000 per year. Concessional contribution cap also includes your employer SG contributions and personal deductible contributions, so keep this in mind. 
• Opting for salary sacrifice reduces your take-home pay, which may affect your immediate financial needs.

Learn more about salary sacrifice contributions.

Personal contributions

Personal contributions, also known as after-tax contributions, are contributions you make to your super from your take home pay (after tax has been taken out). 

Pros

• You may be able to claim a tax deduction on personal contributions. This will change the contribution to a concessional contribution to reduce your taxable income. 
• If your before-tax salary is less than $58,445, 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. 

Limits and caps

These contributions count towards your after-tax (non-concessional) contributions cap of $110,000 per year^.1

Learn more about personal contributions.

See for yourself

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

Try the Spare change calculator.