Superannuation Salary Sacrifice and Your Salary Index: What Changes and What Doesn't

Understanding the Salary Index

The Australian salary index, published by Salary Index, compares your gross yearly ordinary-time earnings to the national line. The national line is set at 100, which equals $108,352 per year (based on the ABS Average Weekly Earnings of $2,083.70 per week for full-time adults, May 2026). Your personal index is your annual gross pay divided by $108,352, multiplied by 100. For example, if you earn $80,000 a year, your index is 73.8. If you earn $150,000, your index is 138.4. The index helps you see where your pay sits relative to the average full-time worker, across states, industries, and award levels.

What Is Superannuation Salary Sacrifice?

Superannuation salary sacrifice is an arrangement where you agree with your employer to forgo part of your before-tax salary in exchange for additional super contributions. The sacrificed amount goes into your super fund, where it is taxed at 15% (instead of your marginal tax rate). This can be a tax-effective way to boost your retirement savings, especially if you are on a higher marginal tax rate. The key point for the salary index is that the sacrifice reduces your take-home pay and taxable income, but it does not change your gross ordinary-time earnings.

How Salary Sacrifice Affects Your Index Position

Because the salary index is calculated using your gross ordinary-time earnings before any deductions, superannuation salary sacrifice has no effect on your index number. Your employer reports your gross salary (the amount before the sacrifice) to the ABS and to the ATO for PAYG purposes. So if you earn $100,000 gross and sacrifice $10,000, your index remains 92.3. The sacrifice only changes your taxable income to $90,000 and your super contributions increase. This distinction is important: the index is a measure of your gross pay, not your net pay or super balance.

Examples Across Pay Levels

Consider a retail worker earning the industry average for retail trade. The retail trade index is 75.9, which corresponds to about $82,200 per year (75.9% of $108,352). If that worker salary sacrifices $5,000 into super, their gross earnings for index purposes are still $82,200, so their index stays at 75.9. Their taxable income drops to $77,200, and they pay less tax. Meanwhile, their super fund receives the $5,000 sacrifice plus the employer’s super guarantee (12% of $82,200 = $9,864, but note that the sacrifice counts towards the guarantee, so the employer may only contribute an additional $4,864). The net effect is a higher super balance and lower tax, but no change in index.

For a professional in the scientific and technical sector (index 114.7, or about $124,300 per year), salary sacrificing up to the concessional cap ($27,500 in 2026–27) can significantly reduce tax. Their index remains 114.7 regardless of how much they sacrifice. The index is a gross benchmark, not a net one.

Considerations for Award Workers

If you are paid under a modern award, your minimum wage is set by the award, and salary sacrifice cannot reduce your cash wage below the award rate. The Fair Work Ombudsman requires that after salary sacrifice, your remaining cash pay must still meet the award minimum. For example, the national minimum wage from 1 July 2026 is $26.44 per hour (index 48.2). A casual worker gets a loading of $33.05 per hour. If you sacrifice part of your wage, your cash pay cannot fall below these minimums. Your gross ordinary-time earnings (the award rate times hours) are still used for the index, so the index reflects your award classification, not the sacrifice.

Junior rates are lower, as set by the National Minimum Wage Order. For a 19-year-old, the minimum is $21.81 per hour. Salary sacrifice is still possible, but the cash pay must stay above the junior minimum. The index for a junior worker would be based on their actual gross earnings, which could be below the adult line.

Tax and Super Implications

The main benefit of superannuation salary sacrifice is tax savings. For 2026–27, resident tax rates are: nil up to $18,200; 15% from $18,201 to $45,000; 30% from $45,001 to $135,000; 37% from $135,001 to $190,000; and 45% above $190,000. Plus a 2% Medicare levy. By sacrificing into super, you reduce your taxable income, and the contributions are taxed at 15% inside the fund. The difference between your marginal rate and 15% is your saving. However, the super guarantee is 12% of your ordinary time earnings (up to a maximum contribution base of $270,830). Salary sacrifice contributions count towards the 12% requirement, so your employer may reduce their own contributions accordingly. Always check your award or agreement and the ATO rules.

How the Index Helps You Compare

The salary index is a useful tool to see where your gross pay stands. How the index works explains the calculation in detail. You can also compare your pay across states (e.g., NSW index 101.2, WA 106.9, ACT 109.9) and industries (mining 154.7, retail 75.9, accommodation and food 72.5). When considering salary sacrifice, remember that your index will not change, but your financial position can improve through lower tax and higher super. Use the pay guides to understand award rates and how they interact with salary sacrifice.

Final Thoughts

Superannuation salary sacrifice is a strategy to manage tax and save for retirement, but it does not alter your position on the Australian salary index. The index is a gross earnings benchmark, and your sacrifice is a deduction from that gross amount. Always seek advice from a qualified professional, as individual circumstances vary. The figures in this guide are based on the ABS Average Weekly Earnings (May 2026), the national minimum wage, and tax rates for 2026–27, as provided by the Fair Work Ombudsman and the ATO.