There are two doors into super. Money that goes in before tax (concessional contributions) is taxed at 15% inside the fund. Money that goes in after tax (non-concessional) isn’t taxed again on the way in. Which door is better depends mostly on your income tax rate.
The two types at a glance
| Concessional (before tax) | Non-concessional (after tax) | |
|---|---|---|
| Includes | Employer 12%, salary sacrifice, personal contributions you claim a deduction for | Personal contributions you don’t claim, spouse contributions |
| Tax going in | 15% (30% if income and contributions exceed $250,000, Division 293) | None |
| 2026–27 cap | $32,500 a year, including your employer’s contributions | $130,000 a year, or up to $390,000 over 3 years with bring-forward |
| Extras | Carry-forward of unused cap for 5 years if your balance is under $500,000 | Government co-contribution of up to $500 for lower incomes |
How much salary sacrifice saves
| Salary | Sacrificed | Tax saved this year |
|---|---|---|
| $60,000 | $5,000 | $925 |
| $90,000 | $5,000 | $850 |
| $150,000 | $5,000 | $1,200 |
The saving comes from swapping your marginal rate (plus 2% Medicare) for a flat 15%. It can be slightly higher on about $60,000 than on $90,000, because reducing your taxable income below $66,667 also increases your low income tax offset. At around $45,000 or less, the gap is small, and the low income super tax offset already refunds the contributions tax on employer super for people earning $37,000 or less.
Over time it adds up. A 40-year-old on $90,000 with $120,000 in super who sacrifices $5,000 a year could retire at 67 with about $792,000 instead of $660,000 (in today’s dollars).
Which to use when
- Salary sacrifice if your employer offers it and you earn above about $45,000: automatic, and the tax saving is immediate.
- Personal deductible contributions if you’re self-employed, your employer doesn’t offer salary sacrifice or you want to top up at the end of the year. You must lodge a notice of intent with your fund and get its acknowledgement before you lodge your tax return.
- Carry-forward in a high-income year, such as after a bonus or selling an investment, if your balance is under $500,000 and you have unused cap from earlier years.
- After-tax contributions once you’ve used your concessional cap, if you’re a lower earner chasing the co-contribution, or to move a windfall into super’s low-tax environment.
Things to watch
- Going over the concessional cap means the excess is taxed at your marginal rate, less a 15% offset.
- Money in super is locked away until you meet a condition of release, usually 60 and retired, or 65.
- Salary sacrifice reduces your reportable salary, but it’s still counted for some tests, such as the Division 293 and some government payments.
- Check your employer still pays the full 12% on your pre-sacrifice salary; most do, and it’s now required.
See the effect on your own balance in the super calculator.
Frequently asked questions
Is salary sacrifice worth it on $60,000?
Yes, usually: you save the difference between your marginal rate (30% plus Medicare) and 15%. The saving is smaller below about $45,000.
Can I salary sacrifice and also make after-tax contributions?
Yes. They count towards different caps.
What happens if I go over the concessional cap?
The excess is added to your taxable income and taxed at your marginal rate, with a 15% offset for the contributions tax already paid. You can choose to release some of it from your fund.
