Salary sacrifice

What is salary sacrifice?

Salary sacrifice involves receiving part of your remuneration in a form other than salary. In the case of super, you could elect to forego some of your before-tax pay and have your employer pay that amount directly into your Brighter Super account.

By putting money into your super this way, you can reduce your taxable income, accumulate more money for retirement, and potentially take home more pay.

Why salary sacrifice to super?

Salary sacrificed super contributions are known as concessional (before-tax) contributions, which are taxed at 15% rather than your marginal tax rate (which could be as high as 47% including the Medicare levy). This means money going into your super account from your before-tax pay attracts less tax than if it were paid to you as income. By contributing to super from your before-tax pay, you effectively lower your taxable income and could potentially bring home a little extra each pay day.

If your total annual income exceeds $250,000, Division 293 tax of an additional 15% applies to before-tax super contributions. This means you would pay 30% tax on salary sacrifice contributions, instead of the standard 15%. See our Superannuation tax information sheet for more information.

How much can I salary sacrifice to super?

There is a limit to the amount of concessional (before tax) contributions you and your employer can contribute to your super each year. Everyone has a concessional contributions cap of $30,000 for the current financial year (2024/25), and if you exceed that cap you could pay higher tax. Read more in our Contribution caps information sheet.

Salary sacrifice and fringe benefits tax

A before-tax super contribution isn’t a fringe benefit and is not subject to fringe benefits tax. It will be reported on your PAYG payment summary as a reportable employer superannuation contribution and may impact your eligibility for government-provided benefits.

Salary sacrifice and the super co-contribution

Salary sacrifice contributions do not qualify for the Australian Government’s super co-contribution of up to $500 each year. If your total annual income is less than $60,400 (for the 2024/25 financial year) and you meet other eligibility requirements, it could be beneficial for you to make after-tax contributions instead of (or in addition to) salary sacrifice. Read more in our Super support for low and middle income earners information sheet.

Important information if you work in local government

If you are a local government employee, you can salary sacrifice any standard member contributions you choose to pay. You can also salary sacrifice extra amounts to your super. Keep in mind, salary sacrifice contributions count towards your annual concessional contributions cap, along with any money your employer contributes and any contributions for which you claim a tax deduction.

Defined benefit members who salary sacrifice are required to increase their contribution to offset the contributions tax and are unable to cancel their employee contribution.

A little now could make a big difference later

It’s important to invest in your future and superannuation enjoys tax advantages that can make a considerable difference to your savings. To see the difference a little extra into your super can make, try our Salary sacrifice calculator.