Salary sacrifice and super contributions
Superannuation — super — is Australia's retirement savings system, and it is tangled up with income tax in useful ways. This guide explains the mechanics only. It is not personal financial advice: super decisions affect your retirement, so speak to a licensed financial adviser or a registered tax agent about your own situation.
Pointers only, not advice
Nothing on this page tells you how much to contribute, whether to salary sacrifice, or which fund to choose. It describes the rules and the limits so you can have an informed conversation with someone licensed to advise you.
The Super Guarantee: 12%
Employers must pay the Super Guarantee (SG) — currently 12% of your ordinary time earnings — into your super fund. The rate reached 12% on 1 July 2025, the final legislated rate. From 1 July 2026, under Payday Super, employers must pay SG at the same time as wages, instead of quarterly.
Salary sacrifice
Salary sacrifice is an arrangement with your employer to pay part of your pre-tax salary into super instead of paying it to you. The sacrificed amount is not taxed as salary; instead it is taxed at 15% inside the fund (for most people). It counts toward the concessional contributions cap below, so the cap is what limits how much you can sacrifice.
Contribution caps (2026–27)
| Cap | 2026–27 limit | Notes |
|---|---|---|
| Concessional (pre-tax) | $32,500 | Includes employer SG, salary sacrifice, and personal deductible contributions |
| Non-concessional (after-tax) | $120,000 | Bring-forward up to $360,000 over three years if eligible |
The concessional cap was $30,000 in 2025–26 and rises to $32,500 from 1 July 2026. Contributions above the cap are taxed at your marginal rate, with an offset for the 15% already paid in the fund. If your total super balance was below $500,000 at the previous 30 June, you can carry forward unused concessional cap space for up to five years.
Division 293: high earners
If your income exceeds $250,000, an extra 15% tax applies to your concessional contributions (Division 293 tax), so those contributions are effectively taxed at 30% inside the fund rather than 15%.
Accessing super
Your preservation age — the earliest age you can generally access super — is 60 for people born on or after 1 July 1964. Benefits from a taxed super fund are generally tax-free from age 60. Before preservation age, super is locked away except in limited circumstances such as severe financial hardship or specific medical grounds.
Sources: Australian Taxation Office (ato.gov.au) — Super; Contribution caps; Salary sacrifice arrangements; Division 293 tax.