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Everything you need to know about salary sacrificing

Confused about salary sacrificing? You’re not alone. Let us clear it up for you.



What is salary sacrificing? Salary sacrificing (also known as salary packaging) is an arrangement between you and your employer, where you can use your pre-tax income to purchase some items or services. Your taxable income is therefore reduced and as a result, so is your tax bill. For many, it’s a win/win situation. (1)


There are a lot of rules.


But there are two key points to remember.


Salary sacrificing depends on your employer and you both must agree on the arrangement.


Arrangements must be made in advance - you cannot sacrifice money that you’ve already been paid.


What to salary sacrifice for?


The most common way to use a salary sacrifice arrangement is to boost your superannuation, buy electronics such as laptops and devices, purchase cars and even buy a new home.


Superannuation - the contributed portion of your income will be taxed at a much lower rate (15% as opposed to 32.5% for an average weekly Australian wage of $1,238.30). (2)


Buying a house - salary sacrificing through super is especially beneficial for first-home buyers who are now able to withdraw up to $30,000 plus earnings to purchase their first home. If you don’t use this towards your first home, any salary sacrificed contributions will have to stay in your super until you retire, or you can pay a special tax to access it sooner. (3)

Purchasing a new car - the most popular way is a novated lease. Your employer takes the repayments and running costs out of your pre-tax income and you get to enjoy the car. Just make sure you’re buying a car within your means. (3)


Purchasing devices - there are some rules to keep in mind, including the device must be portable and used primarily for work. (4)


Is it worth it?


Salary sacrificing is a useful tool that can help you achieve your financial goals, as long as you’re smart about it. Don’t purchase something you don’t necessarily need just because of the possible tax breaks. Making these decisions alone can be confusing, which is why it’s always a smart move to discuss your options with the experts: us.


If you would like more information on salary sacrificing, feel free to get in touch with us anytime.



1: Australian Government Australian Securities & Investments Commission (2019). MoneySmart. [online] Moneysmart.gov.au. Available at: https://www.moneysmart.gov.au/managing-yourmoney/income-tax/salary-packaging [Accessed 28 Oct. 2019].

2. Australian Government, Australian Taxation Office (2019). Salary sacrificing super. [online] Ato.gov.au. Available at: https://www.ato.gov.au/Individuals/Super/Growing-yoursuper/Adding-to-your-super/Salary-sacrificing-super [Accessed 28 Oct. 2019].

3. Wright, P. (2019). A beginner’s guide to salary sacrificing your house, superannuation and car - ABC Life. ABC News. [online] 3 Mar. Available at: https://www.abc.net.au/life/what-salary-packaging-is-andhow-it-works/10830070 [Accessed 28 Oct. 2019].

4: Chapman, M. (2016). Five things you didn’t know you could salary sacrifice. [online] Money Magazine. Available at: https://www.moneymag.com.au/salary-sacrifice [Accessed 28 Oct. 2019].

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© 2018 Bradbury Wealth

Shane Bradbury (Authorised Representative #244677) is an employee of STB Wealth Pty Ltd ACN 614 239 799 trading as Bradbury Wealth (Corporate Authorised Representative #1250433) of Meritum Financial Group Pty Ltd ABN 93 106 888 215 (Australian Financial Services Licence #245569) Any advice in this site is of a general nature only and has not been tailored to your personal circumstances. Please see personal advice prior to acting on this information. To read our Financial Services Guide click here. To read our Terms and Conditions click here

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