1. What is Salary Sacrifice?

Salary sacrifice (salary packaging) is an arrangement where you agree to receive less take-home pay in return for your employer providing benefits of a similar value. This can reduce your taxable income and potentially increase your net income.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• Gross Salary — Your total salary before any deductions
• Sacrifice — The amount you choose to sacrifice for benefits
• Taxable Income — Gross salary minus sacrifice amount
• Tax — Calculated based on Australian tax brackets
• Medicare Levy — 2% of taxable income

3. Benefits of Salary Sacrifice

Details: Salary sacrifice can reduce your taxable income, potentially lowering your tax bracket and increasing your take-home pay. Common sacrifice items include superannuation, cars, and 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 salary sacrifice?
A: Common items include super contributions, cars, laptops, phones, and 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 based on FBT (Fringe Benefits Tax) exemptions. The common cap is $9,095 for general expenses or $18,650 for certain benefits.

Q3: Does salary sacrifice affect my super guarantee?
A: Your employer's 11% super guarantee is calculated on your pre-sacrifice salary unless you negotiate otherwise.

Q4: Are there any downsides to salary sacrifice?
A: It may affect your borrowing capacity, some government benefits, and you're locked into the arrangement for the agreed period.

Q5: Is salary sacrifice the same as a tax deduction?
A: No, salary sacrifice reduces your taxable income upfront, while deductions are claimed after tax is calculated.