Salary sacrifice is an arrangement where you redirect part of your pre-tax salary into superannuation (or other approved benefits). Because the amount is taken before tax, it reduces your taxable income — so you pay less income tax and Medicare levy. Inside the super fund, the contribution is taxed at a flat 15% (well below most marginal rates).

For 2025-26, the concessional contributions cap is $30,000 per year. This includes your employer's 12% super guarantee plus any salary sacrifice. Exceeding the cap means the excess is taxed at your marginal rate (with a 15% offset for tax already paid inside super).

Note that salary sacrifice increases your reportable employer super contributions (RESC), which is added back when calculating HECS repayment income and Medicare Levy Surcharge income — so it won't reduce those obligations.