Super building blocks


Making super contributions by way of salary sacrificing, is a great way to boost your nest egg.

It involves giving up some of your pay and putting it into your super instead. You will save tax and boost your super.

Salary sacrificing is when you ask your employer to redirect a portion of your pay as a contribution to super. By ‘sacrificing’ some of your before-tax salary and putting it into your super fund, you get taxed at the special rate of 15%. That’s why it’s also known as ‘concessional contributions’ because there are tax concessions with these types of contributions. This suits higher income earners due to their higher marginal tax rate.

There is a limit on how much you can put into super each year by salary sacrifice, and it is important to note that concessional caps include your employer’s (currently 9.5%) super guarantee contribution.

For more details see the ATO’s information on key superannuation rates and thresholds.

Case study: Robyn boosts her super by salary sacrificing

Robyn earns $90,000 before tax, excluding her employer’s super contribution.

If Robyn decides to redirect $10,000 of her pay into salary sacrifice super contributions, she will save $2,400 in tax, with the extra money going into her super fund.

Robyn’s boost Does nothing Salary sacrifices $10,000
Take-home pay $66,953 $60,853
Tax $23,047 $19,147
Extra money into super $0 $8,500
Net benefit $66,953 $69,353 ($2,400 better off)