How to Salary Sacrifice: Compare Job Offers with the Salary Index

How to Salary Sacrifice When Comparing Job Offers

When you read a job ad, the advertised salary is usually a base figure. But the real value of an offer can change if you can salary sacrifice. Knowing how to salary sacrifice helps you compare offers on an equal footing. This guide explains salary sacrifice, how it affects your take-home pay, and how to use the Salary Index to see where an offer sits against national benchmarks.

What Is Salary Sacrifice?

Salary sacrifice is an agreement between you and your employer. You give up part of your pre-tax salary in return for a benefit of equivalent value. Common benefits include extra super contributions, a car (under a novated lease), or electronic devices. The sacrificed amount is deducted from your gross pay before income tax is calculated. This lowers your taxable income, so you pay less tax and Medicare levy. Your employer may have to pay fringe benefits tax (FBT) on some benefits, but many items like super contributions are exempt.

For example, if your base salary is $90,000 and you sacrifice $10,000 into super, your taxable income becomes $80,000. You save tax on the $10,000 at your marginal rate. The super fund pays 15% tax on the contribution, which is usually lower than your marginal rate.

How to Compare Job Offers Using Salary Sacrifice

When comparing two job ads, look beyond the base salary. One offer might be $100,000 with no salary sacrifice options, while another is $95,000 but allows you to sacrifice $10,000 into super. The second offer could give you a higher take-home pay after tax, plus extra super. To compare, calculate the total remuneration package: base salary plus employer super guarantee (12%) plus any sacrificed benefits.

Use the pay guides to check award minimums for your role. If the base salary is below the national index line of 100 ($108,352 annualised), it may be low compared to the average full-time earner. But salary sacrifice can make a lower base offer more attractive.

Salary Sacrifice and the Salary Index

The Salary Index shows where a gross annual salary sits against the national line. For example, a base salary of $90,000 has an index of 83 (90,000 / 108,352 × 100). That is below the national average. But if you can salary sacrifice $15,000 into super, your taxable income drops to $75,000, and your take-home pay increases. The index does not capture salary sacrifice, so you need to adjust your comparison.

State indexes also matter. For instance, Western Australia has an index of 106.9 ($115,825 annualised), while Tasmania is 88.6 ($96,008). An offer of $100,000 in WA is below the state average, but in Tasmania it is above. Salary sacrifice can help bridge the gap.

Tax Benefits of Salary Sacrifice

Salary sacrifice reduces your taxable income, which can lower the tax you pay. For the 2026–27 year, resident tax rates (excluding Medicare) are:

• $0–$18,200: nil
• $18,201–$45,000: 15%
• $45,001–$135,000: 30%
• $135,001–$190,000: 37%
• Above $190,000: 45% Plus a 2% Medicare levy.

If you earn $110,000 and sacrifice $10,000, you save 30% tax plus 2% Medicare on that $10,000, or $3,200. Your take-home pay is higher than if you earned $100,000 without sacrifice.

Industry and Award Considerations

Some industries have higher average earnings. Mining has an index of 154.7, while retail trade is 75.9. If you work in retail, a base salary of $60,000 (index 55.4) is low compared to the national line, but salary sacrifice can still help. Check your modern award for minimum rates. The national minimum wage from 1 July 2026 is $26.44 per hour ($52,255 annualised, index 48.2). Award rates are often higher.

Super Guarantee and Salary Sacrifice

From 1 July 2026, the super guarantee is 12% of your ordinary-time earnings. This is on top of your base salary. If you salary sacrifice extra super, those contributions count toward the concessional cap ($30,000 in 2026–27). Be careful not to exceed the cap, or you will pay extra tax. The maximum contribution base for super guarantee is $270,830, so high earners may not get the full 12% on earnings above that.

How to Start Salary Sacrifice

To set up salary sacrifice, ask your employer if they offer it. Not all employers offer salary sacrifice for all benefits. Common options are super, cars, and laptops. You sign a salary sacrifice agreement that specifies the amount and benefit. The arrangement must be for future earnings, not past pay.

Example Comparison

Offer A: $100,000 base, no salary sacrifice. Employer super 12% = $12,000. Total package $112,000. Tax on $100,000 (resident, no other deductions): $24,067 tax + $2,000 Medicare = $26,067. Take-home $73,933.

Offer B: $95,000 base, allows salary sacrifice $10,000 into super. Employer super 12% on $95,000 = $11,400. Total package $106,400 (plus $10,000 sacrificed into super). Taxable income $85,000. Tax: $18,217 + $1,700 Medicare = $19,917. Take-home $65,083. Plus $10,000 in super (total super $21,400). Offer B gives lower take-home but higher super. If you value super, offer B may be better.

Use the how the index works to see where each base sits. Offer A index 92.3, offer B index 87.7. Both below national line, but salary sacrifice changes the effective value.

Caveats

Remember that salary sacrifice is not always tax-free. Some benefits attract FBT, which your employer may pass on to you. Always read the fine print. The topics page has more on salary sacrifice guides. Never assume salary sacrifice will not affect your eligibility for government payments or HELP repayment.

Conclusion

Knowing how to salary sacrifice is a key skill when comparing job ads. It lets you see the real value of an offer. Use the Salary Index to check if an offer is above or below the national line, then adjust for salary sacrifice. This helps you make a fair comparison between different packages.