1. What is Salary Sacrifice?

Salary sacrifice is an arrangement where an employee agrees to receive reduced pay in exchange for employer benefits. This can reduce taxable income and potentially lower tax obligations.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• Gross Salary — Total salary before any deductions
• Sacrifice — Amount sacrificed for benefits
• Taxable Income — Gross salary minus sacrifice amount
• Tax — Calculated using 2022 Australian tax brackets
• Medicare Levy — 2% of taxable income

3. Importance of Salary Sacrifice

Details: Salary sacrifice can be an effective way to reduce taxable income while gaining benefits. Common sacrifice items include superannuation contributions, cars, or electronic devices.

4. Using the Calculator

Tips: Enter your gross annual salary and the amount you wish to sacrifice. The calculator will show your reduced taxable income, calculated tax, Medicare levy, and final net salary.

5. Frequently Asked Questions (FAQ)

Q1: What can I sacrifice salary for?
A: Common options include superannuation, cars, laptops, or other work-related items. Check with your employer for available options.

Q2: Is there a limit to how much I can sacrifice?
A: Yes, there are limits for different types of benefits. For superannuation, concessional contributions cap is $27,500 (2022-23).

Q3: Does salary sacrifice affect my super guarantee?
A: Yes, employer super contributions are calculated on your reduced salary after sacrifice.

Q4: Are all sacrificed amounts tax-free?
A: No, different benefits have different tax treatments. Some may be fringe benefits and subject to FBT.

Q5: Can I change my sacrifice arrangement?
A: Typically yes, but only prospectively. You can't undo arrangements for salary already sacrificed.