Salary sacrifice

What is salary sacrifice?

Salary sacrifice contributions to super are before-tax (or “concessional”) superannuation contributions. 

With your employer, you may be able to arrange to "sacrifice" part of your normal salary (before tax) to be paid directly into your super. Not only is this a convenient way of setting up regular additional payments into your super, but you can also save on tax.

Savings and tax benefits of salary sacrifice

There are considerable savings and tax benefits of salary sacrifice: 

  • If you salary sacrifice, you will reduce your normal income. This may also reduce the amount of income tax you pay.
  • You increase your super savings, giving you more money in retirement

How to set up salary sacrifice 

  • Check with your employer if you can salary sacrifice
  • Calculate how much and how often you would like to make contributions
  • Get financial advice to make sure salary sacrifice is right for you
  • Complete a salary sacrifice agreement form and pass onto your employer to complete.


Salary sacrifice contribution caps

There are limits on how much you can contribute through salary sacrifice before you start to pay extra tax.  

Salary sacrifice contributions are counted towards your overall concessional contributions. Concessional contributions also include the Super Guarantee contributions your employer pays. So if you are wanting to sacrifice large sums, you will need to take into consideration the contributions made by your employer to ensure you stay within the concessional tax limits.

Contribution caps dependent on your age

49 and under

  • For the 2016 - 2017 financial year, the concessional cap is $30,000 for anyone aged 49 years or younger on 30 June 2016.

50 and over

  • If you turn 50 in 2016 - 2017 or older, you can contribute up to $35,000 before paying any extra tax.