What are the benefits of salary sacrificing?
Boost your retirement savings
Reduces your taxable income
Pay less tax on contributions
There can be a number of benefits to salary sacrificing but it may not be the right choice for everyone. We recommend you speak to a financial adviser when making decisions that could affect your income or your super.
How does salary sacrificing work?
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Read the transcript
Salary sacrificing
Salary sacrifice is a way of using some of your before-tax earnings to your advantage.
You might be familiar with using a salary sacrifice arrangement to lease a car or some equipment for your job. But you can also use this method to make extra contributions to your super.
There are two main benefits to salary sacrificing to super. First, it's an easy way to give you a super boost and help it grow faster. And second, it can help you save on tax.
Salary sacrificing to your super is something you arrange with your employer. Because it comes out of your salary before you've paid income tax, it's generally taxed as super at 15% and not at your marginal tax rate.
Depending on your circumstances, salary sacrifice can reduce the overall amount of tax you pay.
While topping up your super’s a great way to save, and even a little extra today can make a big difference tomorrow, it's important to be aware of the limits (or ‘caps’) the government sets on super contributions. So keep track of your super contributions by logging into your super account regularly. If you're a UniSuper member, checking your account is easy. You can use our award-winning app or log into your account via our website.
Before you start salary sacrificing, it's important to consider your situation. For example, it could be more effective for you to top up your super with your after-tax income. So it's best to check.
If you're keen to understand what your options are, why not speak with one of our super consultants? Appointments are available to anyone, online and in-person, at no additional cost, even if you're not a UniSuper member.
Whatever you decide, with UniSuper, it's easy to imagine a future worth retiring for. Visit unisuper.com.au/salarysacrifice to learn more.
The information contained in this video is of a general nature and doesn't consider your personal circumstances. Before making decisions, consider the relevant PDS and TMD on our website and your circumstances, and whether to seek financial advice. Investment returns can be positive or negative. Past performance isn’t indicative of future performance. UniSuper Advice is operated by UniSuper Management Pty Ltd ABN 91 006 961 799 (USM), which is licensed to provide financial product advice. USM is also the administrator of the fund UniSuper ABN 91 385 943 850 (UniSuper). UniSuper Limited ABN 54 006 027 121 is the trustee of UniSuper.
What is an example of salary sacrificing?
*Including the Medicare levy
How to set up salary sacrifice super contributions
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1. Contact your employerHave a chat with your employer’s payroll team and confirm that your workplace offers this scheme.
If not, you can still make after-tax voluntary contributions to your super.
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2. Nominate a portion of your pay
Think about how much of your income you’d like to direct to your super account before you’re paid.
You can decide to salary sacrifice a one-off payment or at a frequency that you’re comfortable with.
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3. Document your agreementOnce you’ve decided the amount you’d like to salary sacrifice and how often, you and your employer must sign a document that states the terms of the agreement.
This can help in case there are any disputes later down the track.
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4. Don't exceed the concessional contribution capFrom 1 July 2024, the concessional contributions cap is $30,000 per year.
This is the maximum amount of before-tax contributions you can typically make to your super each year without being subject to extra tax.
For more information on the concessional contributions cap, visit the ATO.
What’s the difference between salary sacrifice and voluntary super contributions?
Salary sacrifice super contributions
As a salary sacrifice super contribution is deducted from your pay before you receive it as income, this could also help you to reduce the amount of tax you pay on your income.
You can make a one-off salary sacrifice super contribution or decide to make regular contributions by agreement with your employer.
Voluntary super contributions
A voluntary contribution may also be known as a non-concessional contribution, a personal contribution, or an after-tax contribution.
You can make a voluntary super contribution by paying directly into your super account through your super fund.
Frequently asked questions
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Can I withdraw salary sacrifice contributions earlier?
Generally, you cannot withdraw salary sacrifice super contributions (concessional contributions) until you meet a condition of release, such as reaching your preservation age and retiring, or turning 65. -
How much can I salary sacrifice?
You must meet the concessional contributions cap which is set at $30,000 as at 1 July 2024, in order for your salary sacrificed super contributions to be taxed at 15%.
For more information on salary sacrificing super and tax, visit the ATO.
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Can anyone salary sacrifice super?
To begin salary sacrifice contribution you will need to come to an agreement with your employer. Your employer is not legally obliged to allow it, but most generally will. -
Can I salary sacrifice into my partner’s super?
No. You cannot make salary sacrifice super contributions (concessional contributions) to your partner’s super.
However, you can make after-tax (non-concessional) spouse super contributions.
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Can DBD members make salary sacrifice super contributions?
DBD members can make default member contributions as salary sacrifice super contributions to their defined benefit component. They may also make additional salary sacrifice contributions to their accumulation component.
The information is of a general nature and doesn't consider your personal circumstances. Before making decisions, you should consider the PDS and TMD on our website, and whether the information is appropriate for your circumstances otherwise seek financial advice.