1. What is Salary Sacrifice?

Salary sacrifice is an arrangement where an employee agrees to receive less take-home pay in exchange for benefits of similar value. In Australia, common salary sacrifice items include superannuation contributions, cars, and electronic devices.

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 based on Australian tax brackets
• Medicare Levy — 2% of taxable income

Explanation: The calculator shows how sacrificing part of your salary can reduce your taxable income and potentially lower your overall tax burden.

3. Importance of Salary Sacrifice

Details: Salary sacrificing can be an effective way to reduce taxable income, potentially moving you into a lower tax bracket and reducing your overall tax liability while increasing your benefits.

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. Rules vary by employer.

Q2: Is there a limit to how much I can sacrifice?
A: Yes, there are limits, especially for superannuation. The concessional contributions cap is $27,500 per year (2023-24).

Q3: Does salary sacrifice affect my super guarantee?
A: No, your employer must still pay 11% super guarantee on your original gross salary.

Q4: Are there FBT implications?
A: Some salary sacrifice arrangements may attract Fringe Benefits Tax (FBT), which your employer pays.

Q5: Can I salary sacrifice to reduce HECS/HELP debt repayments?
A: No, HELP repayments are based on your gross income before salary sacrifice.