1. What is Salary Sacrifice?

Salary sacrifice is an arrangement where an employee agrees to receive reduced pay in exchange for employer contributions to their superannuation fund. This can provide tax benefits as the sacrificed amount is taxed at the superannuation rate rather than your marginal tax rate.

2. How Does the Calculator Work?

The calculator uses the salary sacrifice formula:

Where:

• Gross Salary — Your total salary before any deductions
• Sacrifice — Amount you choose to contribute to superannuation
• Taxable Income — Tax calculated on your reduced income
• Medicare Levy — Standard healthcare levy (typically 2% of taxable income)

3. Benefits of Salary Sacrifice

Details: Salary sacrificing can reduce your taxable income, potentially lowering your tax bracket and increasing your retirement savings. The sacrificed amount is only taxed at 15% (up to concessional contributions cap) rather than your marginal rate.

4. Using the Calculator

Tips: Enter your gross salary, the amount you wish to sacrifice, your taxable income after sacrifice, and the Medicare Levy amount. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the maximum I can salary sacrifice?
A: The concessional contributions cap is $27,500 per year (2023-24), including employer contributions.

Q2: Does salary sacrifice affect my take-home pay?
A: Yes, it reduces your immediate take-home pay but increases your super balance and may reduce your tax.

Q3: Is salary sacrifice right for everyone?
A: It's most beneficial for higher income earners who can benefit from moving into a lower tax bracket.

Q4: Can I access sacrificed amounts before retirement?
A: Generally no - superannuation is preserved until you meet a condition of release.

Q5: How does this affect my employer contributions?
A: Your employer must still pay 11% super guarantee on your original salary (from July 2023).