How to set up salary sacrifice
- Check with HR or payroll that your employer offers salary sacrificing
- If so, you can set up your contribution using this pre-filled form
- Note: the cap on concessional contributions is $30,000 each year and includes both your salary sacrifice and the mandatory 12% super contributions your employer pays you. If you go over this limit, you’ll pay extra tax.
- If you’re an Aware Super member, log in to Member Online to check that you’re receiving your salary sacrifice contributions and your 12% super guarantee (SG).
- If you want to stop salary sacrificing to your super talk to your employer through HR or payroll.
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Meet Jessica.
- She’s 34 years old
- Her yearly salary is $78,000
- Her super balance is $74,000
- She salary sacrifices $100 per fortnight from her pay (before tax) to her super
- She makes these contributions until age 67
By making regular contributions, Jessica is reducing her taxable income, and therefore how much tax she pays. Even though she’s contributing $100 per fortnight, her take-home pay only reduces by $68 dollars per fortnight.
Because of these regular contributions, Jessica has:
- Increased her super balance by $112,000 at retirement age
- Saved $442 in tax in the first year
Even a small amount per fortnight can add up to a significant extra amount over time.
- Retirement balances are rounded to the nearest $1,000.
- Numbers are presented in today's dollars, deflated using Average Weekly Ordinary Time Earnings (AWOTE) at 3.7% p.a.
- Salary Sacrifice contributions are assumed to be made monthly, are increased in line with annual salary increases of 3.7% p.a. and assumes concessional contribution caps are indexed in line with AWOTE.
- Based on an average Aware female member aged 34, with a current balance of $74,000, earning $78,000 p.a. and planning to retire at age 67.
- Based on SG of 12%.
- Based on current legislated tax rates as at 1 July 2025, and incorporating future legislated tax changes up to financial year 2027/28.
- Asset-based fee is assumed to be 0.15% p.a., capped at a maximum of $750 p.a. Fee cap is indexed in line with AWOTE of 3.7% p.a.
- Fixed fee is assumed to be $52 p.a., increasing in line with assumed wage inflation of 3.7% p.a.
- Investment returns are based on the Aware Super MySuper Life Cycle option, assumed to be CPI + 4% until age 55, reducing from CPI + 4% to CPI + 2.75% between the ages 55-65 (inclusive) and CPI + 2.75% from age 65 onwards.
- Investment returns are assumed to be net of tax.
- CPI is assumed to be 2.5% p.a.
- Insurance premiums are based on typical values for a medium risk member.
- Projection does not allow for any Low-Income Super Tax Offset (LISTO) or Government Co-Contribution amounts.
This example is general advice and for illustrative purposes only. It relies on various assumptions. If actual circumstances differ from these assumptions, actual results will be different. Consider your objectives, financial situation, or needs, which have not been accounted for in this information.
Benefits of salary sacrificing
Salary sacrifice can be a simple way to grow your super and reduce the amount of tax you pay.[S2]
- Contributions are taxed at 15%, which is usually lower than your marginal income tax rate
- Helps reduce how much income tax you pay
- Grows your retirement savings
- Added benefit of compound interest working for you over time
- Easy to set up and maintain
How salary sacrifice compares to take-home pay
If you receive $1,000 from your income, you can:
- put it into your savings, where it’s taxed at 34.5% = you’ll have $655 in your savings.
- salary sacrifice it into your super where it’s taxed at 15% = you’ll have $850 in your super.
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This example is general advice and for illustrative purposes only. It relies on various assumptions. If actual circumstances differ from these assumptions, actual results will be different. Consider your objectives, financial situation, or needs, which have not been accounted for in this information.
How much can you contribute?
There’s a cap on how much extra you can contribute to your super fund each financial year without having to pay extra tax. These limits are called 'contribution caps'. If you go over these caps, you may need to pay extra tax. The two types of contributions and their caps for 2025-2026 are:
- Concessional (before-tax): $30,000
- Non-concessional (after-tax): $120,000.
Contributions within the caps are taxed at the concessional rate of 15%. Going over these caps may result in you having to pay extra tax. Learn more about how much you can contribute.
| Contribution amount |
Tax rate applied |
How it’s treated |
|---|---|---|
| Up to $30,000 (within cap) | 15% contributions tax | Concessional contribution |
| Over $30,000 (exceeding cap) | Your marginal income tax rate | Counted toward after-tax cap; additional tax payable |
Can you make extra concessional contributions?
If you haven’t used your full concessional cap in previous years, you may be able to “top up” with the carry-forward rule.
This lets you use unused cap amounts from the five previous years (maximum), provided your total super balance is under $500,000. It can be especially useful if you’ve had a career break or want to contribute more in a high-income year.
Things to consider
Because salary sacrifice lowers your taxable income, it may also affect some government payments and employee benefits, as well as things like borrowing power if you’re applying for a loan. It’s a good idea to factor these in before setting up an arrangement.
Salary sacrifice might not be as tax effective for lower income earners, who may be better off looking into after-tax contributions and the government co-contribution.[S3]
It can be. Salary sacrifice can reduce your taxable income.[S2] Contributions are taxed at 15% which is often lower than your usual tax rate.
Learn more about growing your super.
Salary sacrificing is a great way to grow your super, but it does reduce your take-home pay which could affect your day-to-day budget. If you contribute too much, you could also exceed the concessional contributions cap and pay extra tax. Check your contribution limits. Make sure it suits you and your lifestyle.[S2]
You can salary sacrifice up to the concessional contributions cap which is currently $30,000. This cap also covers employer contributions and personal contributions claimed as a deduction.
Find out more about the concessional cap.
No, your employer deducts these contributions and reports them to the ATO. However, it’s a good idea to check your account and ensure your contributions stay within the cap.
Salary sacrifice is arranged through your employer and taken from your pre-tax pay, each pay cycle.
Personal contributions are generally one-off contributions made from your after-tax income and you can claim them as a tax deduction if you submit a valid notice of intent to claim.[S1]
Watch this video to learn more about personal deductible contributions.
Yes. You can usually change or stop salary sacrifice by speaking with your employer. Check with your HR or payroll team to update your arrangement.
Talk to your HR or payroll team to arrange a formal salary sacrifice agreement. You can use our pre-filled form to get the ball rolling.
If you haven’t used your full concessional cap in previous years, you may be able to add more using the carry-forward rule. You must have a total super balance under $500,000 to use this.
Where to next?
[AD1] Advice provided by Aware Financial Services Australia Limited (ABN 86 003 742 756, AFSL 238430), wholly owned by Aware Super.
[AD2] Members can get advice about their Aware Super accounts at no extra cost, or advice on their broader needs for a fee.
[S1] Before contributing, consider the current annual contribution limits. Exceeding these limits may reduce any tax benefits you could receive. Visit Grow your super for more information.
[S2] Salary sacrifice will save tax in many but not all circumstances and will cause a reduction in your take home pay.
[S3] Check your eligibility for the government's super co-contribution before acting on this information.