Want to pay less tax and grow your super?
Read time: 3 mins

Want to pay less tax and grow your super?

By salary sacrificing part of your wages now, you can not only grow your super balance, you could also potentially pay less tax.

How does salary sacrifice work? 

  1. You can ask your employer to pay an extra part of your wages into your super account (on top of the 10% super they already pay).
  2. You can choose how much extra you contribute, change the amount or stop at any time.
  3. To set up a salary sacrifice arrangement, complete this Payroll Deduction Form and hand it to your payroll office at work.

What are the benefits?

You can grow your super faster

For many people, relying on employer contributions may not be enough to fund a comfortable retirement. Putting a little extra into super yourself can make a big difference.

You could pay less tax

Salary in your super gets taxed at 15%, and salary you take home gets taxed at your usual income rate, which can be as high as 47%.

For example, if you’re on a salary of $50,000, for every $50 that you earn above $37,000, $32.75 will go to your take home pay and $17.25 will go to tax. However, if you salary sacrifice $50 per week, $42.50 will go to your super and just $7.50 will go to tax.

You reduce your taxable income

The more you sacrifice into your super, the smaller your taxable income may be, which could mean savings at tax time.

Find out how much extra you could have when you retire if you put an extra $30 into your super from your wages each week.

SUPER BALANCE AT AGE 67 WITHOUT SALARY SACRIFICEWeekly salary sacrificeDecrease in take-home pay per weekannual tax savingsSuper balance at age 67 with salary sacrificedifference in super

Refer to assumptions below.

What else should you consider? 

  • Your current salary

It’s not as effective for low-income earners. If you earn above $18,200 and less than $37,000, you’ll only save a small amount on tax for every dollar you salary sacrifice. And it might not be possible for you to reduce your budget any further.

  • Limits on before-tax contributions

There’s a $27,500 per year limit on before-tax contributions you can make (including the 10% contributions your employer makes). Any amount over this will be taxed at your marginal tax rate, plus an excess concessional contributions charge.

  •  Carry-forward contributions

If you don’t use the full amount of your concessional contributions cap ($27,500 in a financial year), from 1 July 2018 you can carry-forward the unused amount and take advantage of it up to five years later. You can only do this if your total super balance (across all super funds) is less than $500,000 on 30 June the previous financial year.

For example, if you have two super funds which, in total, are worth less than $500,000 on 30 June 2021, and you received $10,000 in before-tax (concessional) contributions in the last financial year (2019/20), the $17,500 portion of your cap that is unused is effectively rolled over and added to your concessional cap for the current financial year (2021/22). This means that you’d be able to receive up to $45,000 ($17,500 plus $27,500) in before-tax contributions in the current financial year and not exceed your concessional contributions cap.

How do you set it up? 

Just contact your payroll officer or complete the Payroll Deduction Form
Remember, you can change or stop your salary sacrifice at any time.


Do you have questions about salary sacrifice?

Speak to our experienced advisers to find out if it's right for you.

Request a callback

Assumptions: Future values are shown in today's dollars discounted by 4% p.a. 30 years of age as at 1 July 2019, $25,000 superannuation invested in MySuper Balanced, $70,000 p.a. income; income and out-goings occur mid-year; 9.50% employer SG contribution increasing by 0.5% from 01/07/2021 until SG reaches and stays at 12% from 01/07/2025. 6.5% p.a. investment earnings net of fees, taxes and life insurance premiums; inflation is assumed at 2.5% due to the rising costs of living and a further 1.5% due to the rising cost of community living standards; taxes and levies remain constant.

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