Salary Sacrifice Limits: How They Affect Your Job Offer Comparison

What Are Salary Sacrifice Limits?

When you read a job ad, you might see terms like "salary sacrifice available" or "up to $X salary sacrifice into super." Salary sacrifice is an arrangement where you agree to forego part of your pre-tax salary in exchange for benefits such as additional super contributions, a car (via novated lease), or other fringe benefits. The salary sacrifice limits are the maximum amounts you can sacrifice without triggering extra tax or penalties. These limits are set by the Australian Tax Office (ATO) and can change each financial year.

Understanding these limits is crucial when comparing job offers because they affect your take-home pay, your super balance, and how your salary stacks up against the national line. The Salary Index measures your gross ordinary-time earnings against the national benchmark of 100 (full-time adult ordinary-time earnings of $108,352 per year as of May 2026). Salary sacrifice does not change that gross figure—it's still the amount you and your employer agree on—but it does change your taxable income and net pay.

How Salary Sacrifice Limits Work in Practice

Let's say you're comparing two job offers:

• Offer A: $110,000 gross salary, no salary sacrifice options.
• Offer B: $100,000 gross salary, with the ability to salary sacrifice up to $15,000 into super.

Your Salary Index for Offer A is (110,000 ÷ 108,352) × 100 ≈ 101.5. For Offer B, it's (100,000 ÷ 108,352) × 100 ≈ 92.3. At first glance, Offer A looks better on the index. But after salary sacrifice, Offer B's taxable income drops to $85,000, saving you thousands in tax. You also get an extra $15,000 in super (plus the 12% super guarantee on the reduced salary). Your net take-home pay might be higher with Offer B, depending on your tax bracket.

The key limit here is the concessional contributions cap—the maximum you can contribute to super (including salary sacrifice and employer contributions) without paying extra tax. For 2026–27, the cap is not provided in our reference, but it's typically around $30,000. If your employer's super guarantee (12% of $100,000 = $12,000) plus your salary sacrifice ($15,000) totals $27,000, you're under the cap. If you exceed it, you pay additional tax.

Salary Sacrifice for Other Benefits

Salary sacrifice isn't limited to super. You can also sacrifice for a car (novated lease), laptops, or even additional leave. These benefits are subject to Fringe Benefits Tax (FBT) unless exempt. The ATO sets rules but not a specific dollar limit for most items—instead, the limit is effectively the value of the benefit you can justify as part of your remuneration. When comparing job ads, look for phrases like "salary packaging" or "novated lease available." These can significantly boost your net pay, but they don't change your gross salary index.

How the National Line and State Comparisons Come In

The Salary Index uses gross ordinary-time earnings, which is the figure before any salary sacrifice. So if you're comparing offers across states, remember that the index reflects the gross amount. For example, the average index in NSW is 101.2 ($109,658 annualised), while in WA it's 106.9 ($115,825). If you have a job offer in WA with a gross salary of $115,000, that's above the national line. But if you also salary sacrifice $10,000 into super, your taxable income drops to $105,000—still above the national line? No, the index is based on the gross $115,000, so it's 106.1. The sacrifice doesn't lower your index.

However, when you're comparing net pay, state tax rates don't vary (income tax is federal), but cost of living does. The states page can help you see how average earnings differ, but salary sacrifice limits are uniform across Australia.

Industry Considerations

Some industries are more likely to offer salary sacrifice arrangements. For instance, the industries page shows that Mining has a high index (154.7), and many mining companies offer salary packaging for remote area benefits. Retail trade (index 75.9) and accommodation and food services (72.5) may have fewer options. But the limits themselves are set by the ATO, not by industry awards. However, modern awards can specify how salary sacrifice is offered—for example, some awards require employer consent or set minimum conditions. Always check the relevant pay guides for your industry.

Tax and Super Implications

Salary sacrifice into super is taxed at 15% within the fund (if under the cap), compared to your marginal tax rate which could be 30%, 37%, or 45%. That's a big saving. But remember the super guarantee is 12% from 1 July 2026, and it's calculated on your reduced salary if you sacrifice. So if you sacrifice $15,000, your employer pays 12% on $85,000 = $10,200, instead of 12% on $100,000 = $12,000. You lose $1,800 in compulsory super, but you gain $15,000 in sacrificed super—net gain of $13,200. Still worthwhile.

For other benefits like a car, FBT may apply, and the employer might pass that cost to you. The limit is effectively the value of the benefit, but there's no fixed cap like for super. When reading a job ad, ask for a total remuneration package breakdown.

Putting It All Together

When you see a job ad with salary sacrifice options, don't just look at the gross salary. Calculate the net effect on your take-home pay and super. Use the how the index works page to understand the benchmark, but remember that the index is only one part of the picture. Salary sacrifice limits can make a lower-index offer more attractive after tax. Always check the ATO's current caps, as they can change. And if you're unsure about a specific figure, treat it as uncertain—never invent a number.

FAQs

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