If you’re an employee looking to build your superannuation while potentially reducing the amount of tax you pay, salary sacrificing into super may be worth considering.
Salary sacrifice allows you to give up part of your future salary or wages in exchange for your employer making an additional contribution to your superannuation fund. These contributions are made from your pre-tax income and can be an effective way to increase your retirement savings over time.
How Does Salary Sacrifice Work?
An effective salary sacrifice arrangement requires you and your employer to agree in writing that part of your future salary or wages will instead be contributed to your superannuation.
The salary sacrifice contribution is generally made before tax. Rather than being included in your assessable income and taxed at your marginal tax rate, the contribution is generally taxed in your super fund at up to 15%.
This can provide a tax advantage for many employees, particularly where their marginal tax rate is higher than 15%.
What Is the 2026–27 Super Contribution Cap?
For the 2026–27 financial year, the concessional contribution cap is $32,500.
Importantly, this cap includes both your employer’s compulsory Superannuation Guarantee (SG) contributions and your salary sacrifice contributions.
For example, if your employer contributes $15,000 to your super during the year, you would generally have $17,500 remaining under the $32,500 concessional contributions cap.
It is important to keep track of your contributions throughout the year to avoid unintentionally exceeding the cap.
