How a salary sacrifice scheme affects your pay when comparing job offers

What is a salary sacrifice scheme?

A salary sacrifice scheme is an arrangement where you agree to forgo part of your pre-tax salary in exchange for a benefit provided by your employer. Common examples include additional super contributions, a novated lease car, or electronic devices. In job ads, you might see phrases like "salary packaging available" or "novated lease option." This is a key factor when comparing job offers because it affects your take-home pay without changing the gross salary figure that appears on your contract.

How salary sacrifice affects the Salary Index

The Salary Index measures full-time adult ordinary-time earnings. The national line is 100, which corresponds to $108,352 per year (based on ABS Average Weekly Earnings, May 2026). Your gross salary—the amount before any sacrifice—determines your index number. For example, if your base salary is $120,000, your index is roughly 111. A salary sacrifice does not change that number because the index uses gross earnings. However, the sacrifice reduces your taxable income, so you pay less tax and Medicare levy. This means your take-home pay can be higher than someone with the same gross salary who does not sacrifice.

Example: Super salary sacrifice

Suppose you earn $108,352 (index 100) and sacrifice $10,000 into super. Your taxable income becomes $98,352. Using the 2026–27 resident tax rates (nil up to $18,200, 15% from $18,201 to $45,000, 30% from $45,001 to $135,000, plus 2% Medicare levy), the tax saving is roughly $3,200. Your take-home pay increases by that amount, but your index remains 100. When comparing offers, you need to consider this net benefit.

Reading job ads for salary sacrifice

Job ads often list a base salary and then mention salary sacrifice as a benefit. For example, "$90,000 + super + salary packaging." The packaging might allow you to sacrifice up to $15,000 for a car or other items. To compare this with a job offering $100,000 base with no sacrifice, you need to calculate the after-tax value of the sacrifice. Use your marginal tax rate (from the ATO tables) and consider any fringe benefits tax (FBT) that may apply. For not-for-profit employers, there are higher caps and FBT exemptions, but these are not covered in the reference.

Comparing offers with the Salary Index

The pay guides and how the index works pages explain that the index is a benchmark for gross earnings. When you see a job ad with a salary figure, you can calculate its index by dividing the annual gross by $108,352 and multiplying by 100. This helps you see where the offer sits against the national line. But remember: salary sacrifice does not affect that calculation. To compare net pay, you need to estimate the tax saving and the value of the sacrificed item.

Example: Two offers

• Offer A: $110,000 gross, no salary sacrifice. Index = 101.5. After tax (30% bracket plus Medicare), take-home approx. $78,000.
• Offer B: $100,000 gross, with a salary sacrifice scheme allowing $10,000 into super. Index = 92.3. Taxable income $90,000, tax about $22,000, take-home $68,000 plus $10,000 in super (not accessible until retirement). The net benefit depends on your priorities. If you value the super contribution, Offer B may be better for long-term savings.

Industries and states

Salary sacrifice is more common in certain industries. For example, health care and social assistance has an index of 97.8, and many hospitals and charities offer salary packaging. In mining (index 154.7), salary sacrifice for vehicles is common. State differences also matter: Western Australia has an index of 106.9, and employers there may offer higher base salaries, but salary sacrifice options vary. Always check the total remuneration package.

Tax and super considerations

The super guarantee is 12% from 1 July 2026, calculated on your gross salary (including any sacrificed amount that goes to super). If you sacrifice into super, the employer's 12% contribution is still based on your original gross, so your super balance grows faster. However, salary sacrifice for other items (like a car) does not affect super. The ATO caps how much you can sacrifice into super before additional tax applies. The concessional contributions cap for 2026–27 is $30,000 (including employer contributions).

Common pitfalls

• Some job ads list a "total remuneration package" that includes the value of salary sacrifice benefits. This can be misleading because the cash salary is lower. Always ask for the base salary.
• Salary sacrifice does not reduce your workers' compensation or leave entitlements, which are based on gross salary.
• If you leave the job, you may have to pay out a novated lease or lose the benefit.

Final thoughts

When reading a job ad and comparing offers, treat salary sacrifice as a separate factor from the base salary. Use the Salary Index to benchmark gross pay, then calculate the net effect of any sacrifice. The index itself does not change, but your pocket can. Always read the fine print and ask the employer for details of their salary sacrifice scheme.

Key takeaways

• Salary sacrifice reduces taxable income, not gross salary.
• The Salary Index is based on gross ordinary-time earnings.
• Compare offers by estimating after-tax income plus the value of sacrificed items.
• Check award or enterprise agreement rules—some awards limit salary sacrifice.

For more on how pay compares across roles, see the topics page.