How does salary sacrifice work?
You agree with your employer to trade off part of your pre-tax salary in lieu of higher employer super contributions. Let’s say you’re on the 41.5 per cent marginal tax rate. If you earn $1000 before tax, you’ll receive $585 in your pocket if you take the money as salary. But if you ask your employer to contribute that $1000 to super instead, you’ll pay just 15 per cent tax on the super contribution – leaving you with $850 of retirement savings.
