Concessional (pre-tax) super contributions include your employer's super guarantee (SG), salary sacrifice amounts, and any personal contributions you claim as a tax deduction. These contributions are taxed at 15% inside the super fund, rather than your marginal income tax rate — which is where the tax benefit comes from.
Salary sacrifice is the most common way employees boost concessional contributions. You agree with your employer to redirect part of your pre-tax salary into super. Your taxable income falls by the sacrificed amount, reducing your income tax. In return, the money is locked in super until preservation age (currently 60 for most people).
In 2025-26, total concessional contributions are capped at $30,000 per year. This cap includes employer SG — so if your employer contributes $12,000 in SG (12% of a $100,000 salary), you only have $18,000 of cap space left for salary sacrifice or personal deductible contributions.
If you have not used your full cap in previous years (since 2018-19), unused amounts carry forward for up to five years, provided your total super balance was below $500,000 at the end of the previous financial year. This carry-forward rule lets you make larger one-off contributions in a high-income year without breaching the cap.
Division 293 imposes an additional 15% tax on concessional contributions for individuals whose combined income and concessional contributions exceed $250,000. This effectively doubles the super contributions tax to 30% on the portion above the threshold.
The ATO calculates your Division 293 liability automatically after you lodge your tax return. You receive an assessment and can choose to pay from your own funds or release the amount from your super fund. If you are close to the $250,000 threshold, the benefit of salary sacrifice narrows — but for most people in this bracket the tax saving still exceeds zero because 30% is less than the top marginal rate of 45% plus Medicare levy.
This is the trap that catches many people. Salary sacrifice into super generates reportable employer super contributions (RESC), which the ATO adds back to your taxable income when calculating your HELP repayment income. In practice, this means salary sacrifice does not reduce your compulsory HELP repayment.
If you are on a HELP debt and considering sacrifice, model it carefully. The tax saving from the lower marginal rate still applies, but you will not escape the HELP repayment by redirecting income into super. Our comparison engine shows this interaction clearly.
Similarly, salary sacrifice does not reduce your income for Medicare levy surcharge (MLS) purposes. The ATO uses a special MLS income definition that adds back reportable employer super contributions and reportable fringe benefits. If you do not hold an appropriate level of private hospital cover and your MLS income exceeds $93,000 (singles) or $186,000 (families), you will still pay the surcharge — regardless of how much you sacrifice into super.
The value of salary sacrifice depends almost entirely on the gap between your marginal tax rate and the 15% super contributions tax. Here is a rough framework by 2025-26 tax bracket:
Always check your remaining cap space (including employer SG) before committing to a sacrifice amount. Exceeding the cap is costly and the excess is taxed at your marginal rate with only a partial offset.
No. Salary sacrifice into super creates reportable employer super contributions (RESC), which are added back to your taxable income when the ATO calculates your HELP repayment income. This means sacrificing into super does not reduce your compulsory HELP repayment — and in some edge cases can actually increase it if the RESC pushes you into a higher repayment tier.
Excess concessional contributions are included in your assessable income and taxed at your marginal rate, with a 15% tax offset to account for the contributions tax already paid inside super. You also have the option to release up to 85% of the excess from your super fund to help pay the additional tax.
Yes. Any employee can arrange salary sacrifice with their employer, regardless of employment type. The $30,000 concessional cap and Division 293 rules apply equally. However, casual and part-time employees should check that the sacrifice amount plus employer SG does not exceed the cap.
Generally less so. Below $45,000 your marginal tax rate is 16% (from 2025-26), which is close to the 15% contributions tax inside super. The tax benefit is minimal. You may be better off making after-tax (non-concessional) contributions and claiming the government co-contribution if eligible.
