Salary Sacrificing Super
Salary sacrifice is an arrangement with your employer to forego part of your salary or wages in return for your employer providing benefits of a similar value.
Salary Sacrificing Super

Salary Sacrificing Super

Salary sacrifice is an arrangement with your employer to forego part of your salary or wages in return for your employer providing benefits of a similar value.

One example of a salary sacrifice arrangement is to have some of your salary or wages paid into your super fund instead of to you. On the other hand, if you are the one disbursing salary sacrificing super benefits, you must read on for salary sacrificing super information for employers.

If your employer makes super contributions for you through a salary sacrifice agreement you should be aware how these contributions will affect your super balance. Your financial advisor should be able to keep you abreast of changes affecting your super. Some of the recent alterations that were made into the existing super regulations are listed below.

From 1 January 2020, salary sacrificed super contributions will not:

  • reduce the ordinary time earnings that your employer is required to calculate your super entitlement on
  • count towards the amount of super guarantee contributions that your employer is required to make in order for them to avoid the super guarantee charge.

So does salary sacrificing super reduce taxable income? In other words, how much more or less tax will be paying if your employer takes this route?

Salary sacrificed super contributions are classified as employer super contributions, rather than employee contributions. If you make super contributions through a salary sacrifice agreement, these contributions are taxed in the super fund at a maximum rate of 15%. Generally, this tax rate is less than your marginal tax rate.

The sacrificed component of your total salary package is not counted as assessable income for tax purposes. This means that it is not subject to pay as you go (PAYG) withholding tax.

If salary sacrificed super contributions are made to a complying super fund, the sacrificed amount is not considered a fringe benefit.

If you are deciding whether you should salary sacrifice some of your income into your super, or if you are already salary sacrificing, you can get more information or check your entitlements under the Fair Work Act 2009.

All said and done, every contribution to super possesses some benefits and disadvantages and as an employee, you must have a comprehensive knowledge of both sides.


Unless there are limitations specified in the terms of your employment, there is no limit to the amount you can salary sacrifice into super. However, you should also consider whether the amount you wish to salary sacrifice:

  • will cause you to exceed your concessional (before-tax) contributions cap and attract additional tax – this concessional contributions caplimits the amounts that can be contributed to your super fund and still receive the concessional tax rate of 15%
  • will attract Division 293 tax – this occurs when your income (including concessional super contributions and other components) is more than:
  • $300,000 in one year, before 1 July 2017
  • $250,000 in one year, from 1 July 2017.


In the final assessment, it comes down to what kind of and how big of a retirement fund you are planning to build. While it brings down your taxable income, contributions over your annual limit may attract taxes.

If you have any doubts regarding the benefits of salary sacrifice into super, connect with your financial advisors today. At Wealth Smart, we are always ready to guide you in selecting the most suitable ways to build a secure retirement fund as well as help you find insurances what suits your lifestyle. Call us at 1800 765 100 to learn more.


Does salary sacrificing super reduce taxable income?

Short answer, yes it does. Always speak to your accountant in relation to taxation matters but ew are able to pride salary sacrifice calculators as examples upon request. Please give us a quick call.

Is it worth salary sacrificing into super?

There is some significant benefits to salary sacrificing into super. The obvious ones being a boost to your long term super balance and a reduction in income tax. This will However differ between income levels. It is important to speak with a financial adviser to make sure you have a plan that is catered to your needs and income level. One of the obvious cons is that once this money goes into the super environment you cant change your mind later and try and take it out again. You will need to meet a condition of release before you can get this back. For most people, this means reaching age 65.

How much can you salary sacrifice to super?

Salary sacrificing adds onto your “concessional contribution” cap. It is classified the same as an employee contribution. We are happy to discuss these caps with you before you make any final decisions.

Can I put $300000 into super?

Generally speaking, you are able to use the “bring forward rule” to contribute a lump sum of $300,000 into your super fund in a single financial year. There is some strict criteria around this. We would strongly advise speaking with a financial adviser before making a contribution of this size.