In a nutshell
- If you earn over $34,000 salary sacrificing could save you tax.
- The higher your marginal tax rate, the more you can save.
- Any tax saving can be used to boost your super.
What is salary sacrificing?
When you salary sacrifice, your super contributions are taken from your salary before income tax is paid.
Most Queensland Government employees must contribute a proportion of their salary into their super. Typically, these contributions are made after you've paid income tax, which can be up to 45%* of your salary. Salary sacrificing allows you to make your super contributions before income tax is paid – which may save you from paying high rates of tax and enable you to boost your super.
What’s in it for me?
There are three potential benefits to salary sacrificing super contributions:
- boosting your super
- minimising your income tax
- increasing your take-home pay.
Salary sacrificing could reduce your assessable income, which means you may find yourself with a little extra in your take-home pay. Of course, this extra saving can be contributed straight back into your super – so you’ll be taking home about the same pay, but putting a little extra away each fortnight for your future.
Whether or not salary sacrifice is right for you depends largely on your tax rate. Any income you earn could be taxed at up to 45%*, but the income you salary sacrifice into your super is only taxed at 15%.
So what’s your taxable income, and how much tax could you save?
| Taxable income |
Marginal tax rate
(above lower threshold)* |
Super contributions tax rate |
| $34,001 - $80,000 |
30% |
15% |
| $80,001 - $180,000 |
40% |
15% |
| $180,000+ |
45% |
15% |
If you are in the lowest tax bracket, then you’re less likely to benefit from salary sacrificing.
Are there limits on how much I can salary sacrifice?
There are limits on how much super you can salary sacrifice while receiving the concessional tax rate of 15%.
If you exceed the concessional contributions limit in any given year, your excess contributions will be taxed at a rate of 31.5%. This is in addition to the 15% superannuation contribution tax, so the total would be 46.5%.
| Age |
Annual concessional contributions limit |
| Under 50 |
$50,000 |
| 50 and over |
$100,000# |
Find out more about the limits.
Don't forget the super co-contribution!
If your total income is under $60,342, you may be eligible for the Commonwealth Government co-contribution, and for some people that could mean up to an extra $1,500 in their super.
However, it’s important to consider that salary sacrificed contributions don’t qualify for the super co-contribution – so if you want to make sure your super gets an extra boost from the Commonwealth Government you may have to make an after-tax voluntary contribution.
Find out more about the super co-contribution.