Salary sacrifice diverts pre-tax salary into super, where it is taxed at 15% instead of your marginal rate. On a $100,000 salary that is a gap of about 17 percentage points. The FY2026-27 concessional cap is $32,500 including your employer's contributions, and the money is locked away until preservation age.
The mechanism, in one paragraph
You agree with your employer to take less salary and have that amount paid into your super fund instead. The sacrificed amount never appears as your taxable income, so it is never taxed at your marginal rate. Instead the fund pays 15% contributions tax on the way in. The saving is the difference between those two rates, and it is entirely a function of how high your marginal rate is.
What the gap is worth at each income
This table shows a $10,000 sacrifice. The last two columns matter as much as the saving: your employer's super already uses part of your cap, so the room available is smaller than the cap suggests.
| Salary | Marginal rate with levy | Tax saved on a $10,000 sacrifice | Employer super (12%) | Cap room left |
|---|---|---|---|---|
| $60,000 | 34% | $1,850 | $7,200 | $25,300 |
| $80,000 | 32% | $1,700 | $9,600 | $22,900 |
| $100,000 | 32% | $1,700 | $12,000 | $20,500 |
| $140,000 | 39% | $2,400 | $16,800 | $15,700 |
| $200,000 | 47% | $3,200 | $24,000 | $8,500 |
Read the last column carefully. On $200,000, employer contributions of $24,000 already exceed the $32,500 cap, so there is no room to sacrifice at all without going over. Going over means the excess is added back to your taxable income and taxed at your marginal rate, with an interest charge, which removes the entire point.
Cap source: ATO, contributions caps. Checked 21 August 2026.
The three things that reduce or remove the benefit
- Division 293. Once your income plus concessional contributions exceeds $250,000, an extra 15% applies to the contributions inside the threshold, taking the effective rate to 30%. Against a 47% marginal rate that is still a saving, but it is roughly half the saving you would calculate naively.
- It does not reduce your HECS or HELP repayment. Reportable super contributions are added back when the ATO works out repayment income, so a sacrifice that lowers your tax leaves your study debt repayment exactly where it was. The same add-back applies to the Medicare levy surcharge and to several family payment tests.
- The money is preserved. You cannot access it until you meet a condition of release, which for most people means preservation age and retirement. A 24 percentage point tax saving is not a good trade if you need the money for a house deposit in three years.
Who it genuinely suits
The arithmetic is strongest for someone with a high marginal rate, no imminent need for the cash, and cap room left after employer contributions. It is weakest for someone on a low marginal rate, because if your marginal rate is at or below 15% there is no gap at all and sacrificing can leave you worse off. Someone earning under $45,000 faces a marginal rate of 15% plus the Medicare levy, so the benefit is close to zero and the money becomes inaccessible for decades.
Two alternatives are worth knowing exist. A personal deductible contribution achieves nearly the same tax outcome without an employer arrangement, made after the fact and claimed in your return, which suits variable or self-employed income. And carry-forward contributions let you use unused cap from up to five previous years if your total super balance is under the relevant limit, which suits someone with an unusually high income year.
Getting the arrangement right
- It must be agreed with your employer before you earn the income. You cannot retrospectively sacrifice salary you have already been paid.
- Check your employer calculates super guarantee on your pre-sacrifice salary. Since 1 January 2020 sacrificed amounts cannot reduce the employer's super guarantee obligation, but payroll errors here are common.
- Confirm the sacrifice is reported as a reportable employer super contribution, because that is what feeds the add-backs described above.
Whether salary sacrifice is right for you is a financial advice question, and Clearway Apps is not licensed to answer it. What is on this page is the arithmetic and the rules, so you can have a better conversation with someone who is.
Frequently Asked Questions
How much tax does salary sacrifice save?
The difference between your marginal rate and the 15% contributions tax. On $100,000 that is about 17 percentage points, so a $10,000 sacrifice saves about $1,700 in FY2026-27.
What is the concessional contributions cap for 2026-27?
$32,500, up from $30,000, indexed to average weekly ordinary time earnings. Employer super guarantee counts toward it, so on a $120,000 salary the $14,400 of employer contributions leaves about $18,100 of room.
Does salary sacrifice reduce my HECS repayment?
No. Reportable super contributions are added back to work out repayment income, so your compulsory HECS or HELP repayment is unchanged. The same add-back applies to the Medicare levy surcharge.
What happens if I exceed the concessional cap?
The excess is included in your assessable income and taxed at your marginal rate, with an offset for the 15% already paid by the fund, plus an excess concessional contributions charge. You can elect to release the excess from your fund. Going over generally removes the benefit entirely.
Is salary sacrifice worth it on a low income?
Usually not. If your marginal rate is 15% plus the Medicare levy, the gap against the 15% contributions tax is minimal, and the money becomes inaccessible until preservation age. Government co-contribution or spouse contribution schemes may suit lower incomes better, which is a question for a licensed adviser.
A note on what this is
This guide is general information built from the ATO's published material. It is not tax or financial advice, and it cannot take your circumstances into account. Clearway Apps is not a registered tax agent. Where a decision matters, check it against the ATO page linked in each section or talk to a registered tax agent.