Salary Sacrificing into Super: A Step-by-Step Guide

Imagine turning part of your hard-earned salary into a tax-smart boost for your retirement, all while your super grows faster than you thought possible. That's the power of salary sacrificing into super—a strategy thousands of Aussies use to pay less tax today and build a bigger nest egg for tomorrow.

With the Superannuation Guarantee now at 12% and Payday Super kicking in from 1 July 2026, there's never been a better time to explore this option. Whether you're earning $90,000 or more, salary sacrificing can save you thousands in tax while supercharging your retirement savings. In this step-by-step guide, we'll walk you through everything you need to know, from how it works to real Aussie examples and practical tips tailored for 2026.

What is Salary Sacrificing into Super?

Salary sacrificing—also known as salary packaging for super—means asking your employer to redirect a portion of your pre-tax salary directly into your super fund, instead of paying it into your bank account. This is on top of the mandatory Superannuation Guarantee (SG) contributions your employer must make, which is 12% of your ordinary time earnings (or qualifying earnings from July 2026).

The magic happens because these contributions are taxed at a concessional rate of just 15% in your super fund, often much lower than your marginal income tax rate. For most Aussies earning between $45,001 and $200,000, that's a 32.5% to 37% marginal rate (plus 2% Medicare levy), so you're instantly ahead.

Not all employers offer this perk, so check your enterprise agreement or chat with HR first.

Key Benefits for Everyday Aussies

• Tax savings: Pay 15% contributions tax instead of your higher marginal rate—high earners can save up to $9,900 a year by maxing the cap.
• Bigger super balance: Every dollar sacrificed grows tax-effectively; one calculator shows $1 today could be $7.61 in 30 years at 7% returns.
• Retirement boost: Reduces your taxable income, potentially qualifying you for benefits like the Low Income Super Tax Offset (LISTO).
• No FBT: Unlike other salary sacrifices (e.g., cars or laptops), super contributions avoid Fringe Benefits Tax.

How Salary Sacrificing Works: The Basics

Your employer agrees to 'sacrifice' part of your gross pay—say, $500 a fortnight—straight to your super fund. This counts as a concessional contribution, taxed at 15% upon entry to the fund. Importantly, it includes your SG (12% of earnings) plus any extra from salary sacrifice or personal deductible contributions.

From 1 July 2026, under Payday Super, employers must pay all super—including SG and salary sacrifice—on or before payday, received by your fund within 7 business days. This speeds up growth, as your money compounds sooner.

2026 Contribution Caps You Need to Know

The concessional contributions cap remains $30,000 per financial year (2025-26 rates, expected to hold). Exceed it, and you'll face extra tax.

Income Level	Before-Tax Cap	Tax on Contributions
Under $250,000	$30,000	15%
Over $250,000	$30,000	30% (15% + 15% Division 293 tax)

Provide your Tax File Number (TFN) to your super fund to avoid 47% tax on contributions.

Step-by-Step Guide: How to Start Salary Sacrificing

Step 1: Check Eligibility with Your Employer

Confirm your employer allows salary sacrifice—it's not mandatory but common in awards and EBAs. Review your payslip to see current SG (aim for 12% of ordinary time earnings, capped quarterly).

Step 2: Calculate Your Ideal Amount

Use free tools like the WageCalculator Salary Sacrifice Calculator to model scenarios. Factor in your marginal rate, cap room, and cash flow needs.

Example: Cara earns $90,000. She sacrifices $15,267 annually:

Scenario	Employer SG	Salary Sacrifice	Contributions Tax (15%)	Net Super
No Sacrifice	$9,450	$0	-$1,418	$8,033
With Sacrifice	$9,450	$15,267	-$3,708	$21,010

She saves ~$2,977 in tax.

Step 3: Get the Paperwork Sorted

1. Contact HR or payroll for a salary sacrifice agreement form.
2. Specify amount (e.g., fixed $ or %), frequency, and fund details.
3. Update your super fund with TFN via their portal.
4. Sign and return—changes often take 1-2 pay cycles.

Step 4: Monitor and Adjust

Track via your super app or ATO myGov. Adjust if income changes or you near the cap. From July 2026, watch Payday Super compliance.

Step 5: Claim Deductions if Needed

For personal contributions, claim a tax deduction via myGov to count toward the $30,000 cap.

Real Aussie Examples and Tax Savings

Take Sarah, a Sydney teacher on $100,000. Her marginal rate is 32.5% + 2% levy. Sacrificing $10,000 saves her ~$1,750 in tax ($17,500 less 15% = $1,750 net to super), per 2025-26 rates.

For high earners over $250,000, Division 293 tax adds 15%, but it's still often worthwhile. Always run numbers—tools show compound growth turns savings into tens of thousands over 30 years.

Common Pitfalls and How to Avoid Them

• Cash flow crunch: Don't sacrifice more than you can afford—keep 3-6 months' expenses liquid.
• Cap breaches: Include SG in totals; use ATO's online estimator.
• No TFN: Leads to 47% tax—fix via super fund ASAP.
• Job changes: Arrangements don't transfer; renegotiate.
• Payday Super: From 2026, late payments attract ATO penalties.

Maximising Super in 2026: Pro Tips

Combine with catch-up contributions if under 75 and below caps (unused amounts carry forward 5 years). Downsizers over 60 can add $300,000 tax-free, but salary sacrifice is for working years. Pair with spouse contributions for couples.

Ready to Supercharge Your Retirement?

Salary sacrificing into super is a straightforward win for most Aussies—lower tax, higher balances, and compound magic working for you. Start by crunching your numbers with a calculator, talking to your employer, and linking myGov to ATO and your super fund.

Next steps:

1. Grab your payslip and run a salary sacrifice calc.
2. Email HR today: "Does our workplace offer super salary sacrifice?"
3. Visit ATO's salary sacrifice page for official guidance.
4. Consult a financial adviser via Moneysmart's finder tool for personalised advice.

Act now—every pay cycle counts toward your secure Aussie retirement.