Salary sacrifice calculator
What sacrificing salary into a pension or super saves, after the tax charged inside the fund.
You are better off by
Estimate$2,040.00
tax saved 3,840 less 1,800 of contributions tax
- Take-home pay falls by
- $8,160.00
- Lands in super
- $10,200
- Cap headroom left
- $1,800.00
| Income tax saved | $3,840.00 |
|---|---|
| Contributions tax (15%) | -$1,800.00 |
| Net benefit | $2,040.00 |
| Employer contributions | $16,200 |
The benefit is the gap between your marginal rate and the rate charged inside the fund — 15% in Australia, so up to 32 cents in the dollar.
Side by side
How this is calculated
A rate arbitrage, not a giveaway
Sacrificing works when money is taxed less inside the retirement wrapper than in your hand. In Australia that is 15% against a marginal rate up to 47%, so the benefit is the gap — up to 32 cents in the dollar.
benefit = amount × (marginal rate − fund rate)Employer contributions share the same cap
Annual limits normally count employer contributions and your own together. On a $135,000 salary a 12% employer contribution already uses $16,200 of a $30,000 cap, so the room to sacrifice is $13,800, not the headline figure.
The cost is liquidity
Contributions are preserved until a statutory retirement age, commonly 60 or above. No percentage on this page captures that, and it is the reason sacrificing is a poor home for money you might need within a decade.
Worked example: Sacrificing $12,000 from a $135,000 salary
| Salary | $135,000 |
|---|---|
| Sacrifice | $12,000 |
| Benefit | The gap between two rates |
|---|---|
| Cap headroom | Shared with your employer |
The rates, the caps and the preservation age all differ by country, and each changes the answer materially. Pick a country above for figures you can rely on.
What this assumes
- The arrangement runs for the full year.
- No other concessional contributions are made.
- No high-income contributions surcharge applies.
- Employer contributions use the pre-sacrifice salary.
Where this commonly goes wrong
- High earners often face an additional charge — 15% in Australia above $250,000 — that halves the benefit shown here.
- Contributions are locked away until a preservation age, so the benefit is paid for in liquidity rather than being free.
- Some employers calculate retirement contributions on the reduced salary, which quietly cuts the employer contribution as well.
Questions
What is salary sacrifice?
An arrangement where part of your pay goes into a retirement fund before income tax is applied. It is taxed at the fund’s rate instead, which is usually lower than a working-age marginal rate.
Is there a limit?
Every system caps annual concessional contributions, usually counting employer contributions toward the same limit. Exceeding it typically removes the tax benefit and adds a penalty.
When can I access the money?
Not until a preservation or retirement age set by statute, commonly between 55 and 67. That illiquidity is the real cost of the tax benefit and does not appear in any percentage.
Related tools
Sources
General information only, based on published rules for the the current period. It does not take account of your objectives, financial situation or needs and is not financial product advice. BankSync does not hold an AFSL. Consider advice from a licensed financial adviser.
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