‘Sacrificing’ your salary isn’t as scary as it sounds. Put simply, it’s when some of the salary that would usually go to your regular pay packet is diverted to your super instead.
Because it’s directly taken out of your salary before you’ve paid income tax, the super is taxed at 15%1, not your marginal tax rate (which could be up to 49%2).
That means you could pay less tax! And if you contribute the tax saving to your super, you could end up having more going into your super, but still keeping the same take home pay.
‘Salary sacrificing’ your super isn’t as scary as it sounds. Put simply, it’s when some of the salary that would usually go into your pay packet is added to your super instead.
Salary sacrifice can be a great way to pay extra money into your super and save on tax. These extra contributions are on top of what your employer already puts in, so it can really add more to your super over the long term.
Save on tax while boosting your super
Because the extra payments are directly taken out of your salary by your employer before you’ve paid any income tax, they’re only taxed at 15%1 – not your marginal tax rate (which could be up to 49%2). It means you could pay less tax on those payments!
A little extra can make a big difference
Making any extra contributions to your super can really add up over time and make a difference to your future lifestyle.
Better still, by starting early you may be able to put tens of thousands of extra dollars towards your retirement. So the sooner you start, the bigger the rewards.
Just keep in mind that salary sacrifice contributions are counted towards the concessional contributions cap, and they’re included when calculating your total income for super co-contribution purposes and for other government benefits.3
To see if salary sacrificing is a good option for you, use our Salary Sacrifice calculator.
Queensland Government employees
If you work for the Queensland Government, you're likely to be contributing around 2%-5% of your salary into your super. These personal contributions are known as 'standard contributions', and they’re normally made after you've paid income tax at your marginal tax rate.
By choosing to salary sacrifice both your standard contributions and the resulting tax saving, you could have more going into your super, without necessarily affecting the amount of take-home pay. To start salary sacrificing, contact Remserv or Smart Salary.4
Defined Benefit account holders
Things work a little differently for Defined Benefit accounts, so check with the Defined Benefit Account Guide before making a decision about salary sacrificing.
Is there a limit to how much I can salary sacrifice?
Yes, the Commonwealth Government sets a limit or 'cap' on the contributions you can make to your super. Any contributions you make above this limit attract extra tax.
Do salary sacrificed contributions qualify for the Australian Government’s super co-contribution?
No, to benefit from the co-contributions you’ll need to qualify and make an after-tax voluntary contribution. Learn more about super co-contributions.
Want to find out more?
You can learn more about salary sacrificing in our Personal Contributions Guide.
1. If your adjustable tax income (income plus any other income and losses you declare) is more than $300,000 a year, you'll pay 30% tax on some or all of your contribution.
2. This rate includes the 2% Medicare levy and the 2% Temporary Budget Repair levy.
3. Refer to the ATO for the definition of taxable income.
4. RemServ and Smart Salary are the salary packaging administrators for most Queensland Government employees and they charge a fee to administer the salary sacrifice service. Some major employers, like Queensland Rail, have decided to handle their own salary sacrifice arrangements. If you’re in doubt, check with your pay office.
5. QInvest Limited (ABN 35 063 511 580, AFSL and Australian Credit Licence number 238274) is ultimately owned by the QSuper Board (ABN 32 125 059 006) as trustee for the QSuper Fund (ABN 60 905 115 063). It’s a separate legal entity, responsible for the financial services and credit services it provides.