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Super salary sacrifice

Super salary sacrifice is an easy way of contributing more to your superannuation throughout the year from your pre-tax income, before you're paid.

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Super salary sacrificing is a way of contributing to your super and involves sending part of your pre-taxed income into your super fund instead of your bank account. Salary sacrificing into your super fund from your pre-taxed income ultimately reduces the amount of tax you pay, making it an attractive option for anyone looking to top up their super balance.

This guide will explain how super salary sacrificing works, how to set it up and what to consider before going ahead. If salary sacrificing isn’t for you, we’ve also outlined some other ways of contributing to your super.

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How super salary sacrifice works

Salary sacrifice is the process of redirecting a percentage of your salary or wage into something else. You can set up a salary sacrifice agreement with your employer to help pay off a car, your mortgage payments or to top up your super.

Salary sacrifice into your super fund means, come payday, a percentage of your wage will be sent to your super account rather than into your bank account. These are classed as concessional contributions (more on this later!), because the money that’s sent to your super account is diverted before you’re charged any income tax on it. This is the main benefit of salary sacrificing into your super.

You can elect how much of your pre-taxed income you want to send to your super account instead, although limits do apply (we’ve outlined these limits below).

Super salary sacrificing has many benefits

  • Pre-tax super contributions. Salary sacrificing is classed as a concessional contribution, meaning it’s part of your pre-tax income. This money will instead be taxed at the reduced super tax rate of 15%, rather than your marginal tax rate which could be as high as 45%.
  • Set-and-forget strategy. Salary sacrificing into your super is a great way to make passive contributions to your super. Once you’ve set it up there’s nothing else you need to do – the contributions will automatically be made each time your employer pays you.
  • Your employer handles the admin. Your employer will set up your salary sacrifice contributions with your super fund, so there’s not much admin involved for you.
  • Benefit from compound returns. By making regular contributions to your super from a young age, you’ll benefit from compounded investment returns.
  • No fees. There are no fees charged to make concessional contributions to your super via salary sacrifice.
  • Benefits to those earning more than $37,000. Those with a salary above $37,000 stand to benefit the most from salary sacrificing into super. Instead of paying the marginal tax rate of up to 45%, that income will instead only be taxed at 15%.

What to consider before salary sacrificing into super

Salary sacrificing has many benefits, but there are also a few things to consider before setting it up.

  • Less money at payday. If you elect to send a portion of your salary to your super you’ll end up with less money in your bank account come payday.
  • You can’t access the money. Once you’ve sent the money to your super fund, you can’t access this money until you retire or reach your preservation age. So it’s important to ensure you won’t need the money to meet your financial obligations, such as rent, bills or in the event of an emergency.
  • Limits apply. There are limits as to how much you can contribute to your super, which are outlined below.
  • Not worth it if you earn below $37,000. If you earn below $37,000 your income is only taxed at 19%, so it might not be worth salary sacrificing as you’d only be taxed 4% less.

Super salary sacrifice limits

There's no limit on how much your can choose to salary sacrifice into your super. However, as salary sacrificing is classed as a concessional contribution, there are limits as to how many concessional contributions you can make each year. Concessional contributions are contributions made from your pre-tax income (not the voluntary contributions you choose to make directly from your bank account). Your concessional contributions can’t be more than $27,500 per year, which includes both your salary sacrificed contributions and those made by your employer as part of the super guarantee.

As an example, let’s say you earn $150,000 a year. To meet the 10% super guarantee requirement your employer needs to contribute $15,000 to your super a year. This means you can only make up to $12,500 worth of additional pre-tax contributions.

If you salary sacrifice more than your annual concessional contributions cap, the extra amount won't be taxed at the reduced super tax rate.

Super salary sacrifice example

Salary sacrificing small amounts into your super can add up to a big amount over time. Take a look at some of the below examples, which are based on projections using Industry Super Australia's salary sacrifice calculator.

Let's pretend....

You're 30 years old, earning $80,000 a year and currently have a super balance of $50,000. If you added just $1000 extra into your super each year (or around $19 a week), you could retire with an additional $67,300 in your super. If you upped your contributions to $2000 a year (or around $38 a week), you could retire with an additional $134,500.

How to set up super salary sacrifice

If you want to salary sacrifice into your super this is something you can arrange directly with your employer instead of with your super fund. Simply ask your employer, or the accounts team who manages your salary payments, if they can start a salary sacrifice arrangeemnt for you.

Make sure you check the following:

  • Decide how much of your pay you'd like to sacrifice into super each pay period
  • Make sure your annual salary sacrifice amount plus the amount your employer already pays you into super doesn't exceed your contribution limit
  • Make sure your employer will continue to pay you the full super guarantee amount

How else can I make contributions to my superannuation?

There are four main ways you can contribute to your super.

  • Employer contributions. This is the main source of money paid into an individual’s superannuation account. According to the superannuation guarantee, an employer must pay at least 10% of an employee’s gross salary into their super account every quarter.
  • Concessional contributions. You can arrange for your employer to pay some of your pre-tax salary into your super fund as an additional contribution, known as salary sacrifice. But remember, your contribution allowance is capped at a maximum of $27,500 a year including all your employer and concessional contributions.
  • Non-concessional contributions. A non-concessional contribution is one you make from your post-tax salary. This means you’ve already received the money into your bank account and paid the full tax rate. The cap for these contributions is currently $100,000 a year.
  • Government contributions. If you earn below $36,813 you may be eligible for the government super co-contribution. This means that if you choose to make non-concessional (post-tax) contributions, the government will add $0.50 for each dollar you deposit up to $500.

More tips to grow your super

Salary sacrificing is just one of the many strategies you can use to grow your super balance. To learn about the other ways you can increase your balance, take a look at our guide to growing your superannuation.

The easiest way to boost your super is to make sure you're in a low-fee, high-performing super fund.

Compare super funds

1 - 16 of 37
Name Product Last 1 year performance (p.a.) Last 3 year performance (p.a.) Last 5 year performance (p.a.) Last 10 year performance (p.a.) Fees on $50k balance (p.a.)

Virgin Money Super - LifeStage Tracker

Virgin Money Super - LifeStage Tracker
+17.29%
+13.78%
+10.07%
New Fund
$392
This is a high-risk investment option that aims to deliver higher returns over the long term.

Virgin Money Super LifeStage Tracker is a lifestage super product, so your mix of investments will be continually readjusted in line with your age. This means you'll be invested in more growth assets while you're young.

HESTA Balanced Growth

HESTA Balanced Growth
+14.54%
+10.74%
+9.07%
+9.69%
$528
HESTA is an industry super fund for the health and community services sector and open to all Australians. The Balanced Growth fund invests in a mix of asset classes without taking on too much, or too little, risk.

Australian Retirement Trust (formerly Sunsuper for Life) - Lifecycle Balanced Pool

Finder Award
Australian Retirement Trust (formerly Sunsuper for Life) -  Lifecycle Balanced Pool
+16.31%
+11.45%
+9.58%
+10.14%
$628
Sunsuper and QSuper have merged to create Australian Retirement Trust, one of Australia's largest super funds with more than 2 million members. Its Lifecycle Balanced product invests your super in a mix of growth assets, and reduces your risk when you're near retirement.

AustralianSuper - Pre-mixed, Balanced option

Finder Award
AustralianSuper - Pre-mixed, Balanced option
+15.02%
+12.42%
+10.31%
+10.66%
$472
AustralianSuper is an award-winning industry super fund and the largest super fund in Australia. The Balanced fund invests in a mix of different assets like shares, property and cash.

Spaceship GrowthX

Spaceship GrowthX
+12.31%
+19.14%
New Fund
New Fund
$536
This is a high-risk investment option that aims to deliver higher returns over the long term.
Spaceship's GrowthX fund invests heavily in technology ETFs with high exposures to Australian and international shares. Performance figures and fees supplied by Spaceship, not Chant West.

Australian Ethical Super Balanced

Green Company
Australian Ethical Super Balanced
+13.19%
+12.82%
+9.71%
+9.78%
$622
Certified by the Responsible Investment Association Australasia.
Australian Ethical seeks to invest in companies that have a positive impact on the planet, people and animals, such as renewable energy and healthcare while avoiding investments in coal, oil, tobacco and gambling.

QSuper Lifetime - Aspire 1

QSuper Lifetime - Aspire 1
+12.67%
+10.33%
+9.03%
New Fund
$360
QSuper is part of Australian Retirement Trust. QSuper Lifetime automatically adjusts your investment mix in line with your age and your Lifetime account balance. Eligibility criteria and conditions apply to open a QSuper account (refer to 'More Info').

Aware Super High Growth

Aware Super High Growth
+18.15%
+14.45%
+11.63%
+11.83%
$694
This is a high-risk investment option that aims to deliver higher returns over the long term.
If you join Aware Super's default MySuper Lifecycle option your super will be invested in the High Growth option while you're under 55, giving more exposure to local and international shares.

Australian Catholic Super Lifetime - Grow

Australian Catholic Super Lifetime - Grow
+13.2%
+10.02%
New Fund
New Fund
$488
A Catholic super fund open to all Australians and designed for people working in Catholic education, healthcare or aged care.The Lifetime One fund option changes your investment mix as you get older.

AustralianSuper - Socially Aware

AustralianSuper - Socially Aware
+14.97%
+10.9%
+9.05%
+10.1%
$501
The AustralianSuper Socially Aware option doesn't invest in Australian or international companies that directly own coal and fossil fuel reserves, produce tobacco or those which have single-gender boards.

Bendigo SmartStart Super - Growth Index

Bendigo SmartStart Super - Growth Index
+14.46%
+12.38%
+9.08%
+10.4%
$338
Bendigo SmartStart is a retail super fund. The Growth Index Fund is the default MySuper option for members under 55.

Kogan Super - Enhanced Indexed Growth

Kogan Super - Enhanced Indexed Growth
+14.81%
New Fund
New Fund
New Fund
$332
Kogan Super offers low-fee, high-performing indexed investment options that are managed by Mercer, Australia's largest super administrator. The Enhanced Indexed Growth product invests around two thirds of your balance into Australian and global shares.

Australian Catholic Super Bonds

Australian Catholic Super Bonds
-1.66%
+3.98%
+3.87%
+3.83%
$278

Australian Catholic Super Conservative

Australian Catholic Super Conservative
+6.86%
+6.56%
+5.55%
+6.17%
$463

Australian Catholic Super Conservative Balanced

Australian Catholic Super Conservative Balanced
+10.43%
+8.31%
+6.77%
+7.47%
$478

Australian Catholic Super Growth

Australian Catholic Super Growth
+15.54%
+11.3%
New Fund
New Fund
$488
This is a high-risk investment option that aims to deliver higher returns over the long term.
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Compare up to 4 providers

The information in the table is based on data provided by Chant West Pty Ltd (AFSL 255320) which is itself supplied by third parties. While such information is believed to be accurate, Chant West does not accept responsibility for any inaccuracy in such information. Chant West’s Financial Services Guide is available at https://www.chantwest.com.au/financial-services-guide . Finder offers no guarantees or warranties about the data and we recommend that users make their own enquiries before relying on this information. Performance, fees and insurance data is based on each fund's default MySuper product. Where the performance, fees and insurance data for the MySuper fund vary according to the member's age, results for individuals between 40-49 years of age have been shown. Past performance is not a reliable indicator of future performance.

*Past performance and fee data is for the period ending December 2021.

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