Salary Sacrifice in Australia Explained
Updated 2026-06-11 · 2026-27 financial year · 8 min read
Salary sacrifice lets you redirect part of your pre-tax salary into superannuation or other benefits — reducing your taxable income and paying less income tax. This guide covers how it works, what you can sacrifice, and who benefits most.
How Salary Sacrifice Works
Instead of receiving your full salary (and paying income tax on it), you agree with your employer to take a lower salary. The sacrificed amount goes to an approved benefit — most commonly additional superannuation. Because the money never reaches your bank account, you don’t pay income tax on it.
Super contributions made via salary sacrifice are taxed at 15% inside the super fund (the concessional rate) — compared to the 30–45% you might pay at your marginal rate. The difference is your tax saving.
Worked Example: $100,000 Salary
| Scenario | Without Sacrifice | $10k Sacrifice |
|---|---|---|
| Gross salary | $100,000 | $90,000 |
| Income tax + Medicare | −$26,517 | −$23,517 |
| Take-home pay | $73,483 | $66,483 |
| Super (employer 12%) | $12,000 | $10,800 |
| Salary sacrifice to super | $0 | $10,000 |
| Tax saving | — | $3,000/yr |
Approximate figures for 2026-27. The $10,000 sacrifice attracts 15% super tax ($1,500) inside the fund, so the net tax benefit is ~$1,500 (i.e. you save $3,000 in income tax, but pay $1,500 in super tax). Actual savings depend on marginal rate.
What Can You Salary Sacrifice?
- →Superannuation — Available to most employees. Concessional contributions cap is $30,000/yr (includes employer SG contributions).
- →Novated car lease — Lease payments made pre-tax. Subject to FBT, but the FBT cost may be outweighed by income tax savings for higher earners. Electric vehicles have FBT exemption.
- →FBT-exempt items — Laptops, tablets, and portable electronic devices used primarily for work. One item per category per year.
- →Salary packaging (NFP/hospital) — Charity and not-for-profit employees can sacrifice up to $9,010 of living expenses (meals, mortgage, rent) FBT-free. Hospital/ambulance workers: $15,900.
The HECS Trap: Watch Your Repayment Income
Frequently Asked Questions
Does salary sacrifice reduce my HECS repayment?
No. Since 2017-18, the ATO uses 'repayment income' which includes reportable fringe benefits and reportable employer super contributions. Salary sacrificing to super may not reduce your HECS repayment as much as you expect — the reportable amount gets added back.
What can I salary sacrifice?
Most commonly: additional superannuation contributions (most employees), car leasing via novated lease (most employees), and FBT-exempt items like laptops and work-related expenses. Charity, hospital and not-for-profit employees can also sacrifice up to $9,010 (general) or $15,900 (hospital/ambulance) of living expenses FBT-free.
Is salary sacrifice worth it?
For most employees earning above $45,000, sacrificing into super saves tax because super contributions are taxed at 15% rather than your marginal rate (30–45%). The savings are larger the higher your income bracket. However, you're locking the money in super until preservation age.
What is the concessional contributions cap?
The concessional (pre-tax) contributions cap is $30,000 per year for 2024-25 and 2025-26. This includes your employer's mandatory 12% super guarantee contributions. If your employer contributes $10,800, you can salary sacrifice up to $19,200 before hitting the cap.
Calculate your salary sacrifice saving
Enter your salary and sacrifice amount to see the exact tax saving and take-home impact.
Salary Sacrifice Calculator →