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Ask your employer if they offer salary sacrifice arrangements. Not all businesses do.
Look at your income and expenses, and work out how much of your income you can comfortably give up.
Arrange to have your employer regularly redirect that amount of your wage to your super account instead of your bank account or pay check. This is usually as simple as sending an email to the payroll department, for example:
Hi,
Re: Salary Sacrifice
Please deduct $XXX per month from my salary and send it to the same super fund as my super fund.
Can you please also confirm this has no effect on the employer super guarantee amounts that you currently send to the fund.
Thank you.
Terry earns $7,500 per month and decides that he can comfortably live off just $7,000 of that. He therefore asks his employer to pay $500 from his salary each month into his super account as a salary sacrifice. This adds up to $6,000 in 12 months!
At the end of the financial year, Terry's gross income is $90,000 but because $6,000 has been salary sacrificed, only $84,000 is counted as assessable income and taxed at his regular tax rate. The $6,000 he's salary sacrificed is taxed separately at the concessional tax rate of just 15%.
| Without salary sacrificing (2024/25) | ||
| Amount | Tax | |
| Assessable income | $90,000 | $17,788 |
| Salary sacrifice | $0 | $0 |
| Total tax payable | $17,788 | |
| With salary sacrificing (2024/25) | ||
| Amount | Tax | |
| Assessable income | $84,000 | $15,988 |
| Salary sacrifice | $6,000 | $900 |
| Total tax payable | $16,888 | |
By salary sacrificing just $500 per month, Terry adds an extra $6,000 to his super in one year, and saves $900 in tax.
If your income, plus your before-tax super contribution is:
It's worth noting though, if you earn below around $37,000 there may be very limited advantage in a salary sacrifice arrangement, so a Government super co-contribution may be a more effective way to boost your super.
In 2024/25, the annual cap for before-tax super contributions is $30,000 p.a. This includes:
So, you'll need to make sure that the total of all of these does not go above $30,000.
If you do want to add more to your super, you can also make after-tax contributions to take advantage of the higher contribution caps.
Your salary sacrifice agreement should be in addition to the compulsory Superannuation Guarantee. By law, your employer must not include any of your salary sacrifice into their mandatory super contributions.
This is not at all uncommon, but there are still clever ways to top up your super. Take a look at the find extra money for your super gadget and discover how little changes to your weekly spending, can add a lot to your super.
References
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