What is salary sacrifice?
You agree to take part of your pay as super or a benefit before tax, instead of as cash.
Take-home pay usually falls by less than the amount you move, because that money skips your normal income tax.
The rule
- Salary sacrificing means you and your employer agree that you receive less income before tax, and the employer pays for benefits of similar value. The ATO does not give advice on entering or rejecting an arrangement (ATO, 11 August 2026).
- Money sacrificed into super is a before-tax (concessional) contribution. The fund taxes concessional contributions at 15%.
- The concessional cap is $32,500 from 1 July 2026 ($30,000 in 2024-25 and 2025-26). Your employer's contributions and any you salary sacrifice count together against it.
- Amounts over the cap are excess concessional contributions. The ATO includes them in your income tax return as taxable income.
- Someone with a total super balance under $500,000 on the previous 30 June may be able to use unused cap from the past 5 years (the carry forward rule).
- Division 293: if income plus concessional super adds up to more than $250,000, a further 15% tax applies to the contributions (ATO, 7 August 2026).
- Reportable super contributions count towards repayment income for a study loan and towards income for the Medicare levy surcharge, so sacrificing does not lower either.
What people ask
How much tax do you save with salary sacrifice?
The rule is that the money moved skips income tax at your top rate and the 2% Medicare levy, and the fund then takes 15%. On a $100,000 salary in 2026-27, moving $10,000 skips $3,200 of tax, take-home falls $6,800, and $8,500 reaches the balance. Your own figure depends on your income.
Does salary sacrifice reduce my take-home pay?
Yes, but by less than the amount moved. The difference is the income tax and Medicare levy that are not charged on it.
How much can I salary sacrifice into super?
The cap is $32,500 a year in 2026-27, and your employer's contributions count first. On a $100,000 salary the employer's 12% is $12,000, so $20,500 of the cap is left.
Does salary sacrifice affect my HECS repayment?
No. Reportable super contributions are added back into repayment income.
What happens if I go over the super cap?
The amount over is an excess concessional contribution, and the ATO includes it in your taxable income on your tax return.