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Module 6 · ☕
Super — the 15% lever

The same move as claiming a deduction, scaled up: divert salary into super before tax, where it's taxed at a flat 15% instead of your marginal rate — and let the gap compound for decades.

1The idea

When you "salary-sacrifice" into super, the money goes in before income tax. Inside super it's taxed once at a flat 15% — not the 30%, 37% or 45% you'd pay on that salary in your hand.

It also lowers your taxable income, which can drop you into a lower tax bracket — so the rest of your pay is taxed more gently too. The money you sacrifice is invested and compounds for decades, and from age 60 you can usually draw it tax-free.

The trade-off that makes it honest: super is locked until 60. This lever only wins if you genuinely won't need the money before then.

2Who it's for

The bigger the gap between your tax bracket and 15%, the more it's worth — so it's strongest for anyone earning over ~$45k who can leave the money alone until 60.

You have room under the $30,000 concessional cap — which includes what your employer already pays in.
Under-used the cap in recent years? Carry-forward may let you put in more this year.
Earning over ~$250k? Division 293 doubles the contributions tax to 30% — still better than your marginal rate, but the edge halves.
3The worked example

Sacrifice $10,000 of a $140,000 salary into super:

Taxable income$140,000 → $130,000
Tax bracketdrops 37% → 30%
Income tax saved+$3,550
Less 15% super contributions tax−$1,500
Net benefit this year+$2,050

Your take-home drops by $6,450 — but $8,500 lands in super, already invested and pre-tax. You're $2,050 ahead this year and that $8,500 now compounds for decades. Crossing into the 30% bracket is what makes the saving so large.

4Try it on your numbers
Salary sacrifice into super
Your employer also pays 12% super on top — $1,400/mo ($16,800/yr). The $30k cap counts this in.
Sacrifice /year $10,000
Growth 10.5%
Set to the S&P 500 long-run average ≈ 10.5%/yr with dividends — super funds vary, so adjust to yours.
Over 20 yrs
This year
Taxable income$140,000 → $130,000
Income tax saved+$3,550
Less 15% super contributions tax−$1,500
Net benefit this year+$2,050
Take-home pay /year$104,062 → $97,612 (−$6,450)
… per month$8,672 → $8,134 (−$538/mo)
Into super (after 15%)+$8,500

Over 20 years, the difference compounds
Pre-tax → super$515,359
After-tax → outside super$344,550
Pre-tax → super (85¢ of each $1 invested)  After-tax → invested outside super
Salary sacrifice wins by +$170,809

Locked until 60. Capped at the $30k concessional limit (incl. employer super). Tax is simplified (flat 2% Medicare, no LITO); long-run super ignores the 15% tax on its earnings while the outside option ignores annual dividend tax — these roughly offset. Estimates only.

5The honest caveats
Locked until 60. This is the price of the 15% rate. Don't sacrifice money you might need for a house deposit, emergency, or career break.
The $30k cap includes employer super. Go over it and the excess is taxed back at your marginal rate — count your employer's contributions first.
Making a personal contribution (not through payroll)? You must lodge a Notice of Intent with your fund to claim the deduction.
6How to action it
Check this year's employer super, then your headroom under the $30k cap.
Ask payroll to set up salary sacrifice — or contribute personally and lodge a Notice of Intent before you lodge your return.
Saving for your first home? The same pre-tax trick builds your deposit faster — see the First Home Super Saver calculator.
Next lesson
First Home Super Saver
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General educational information, not personal tax or financial advice. Super rules, caps and Division 293 have detail and change — confirm your specifics with a registered tax agent or at ato.gov.au. Figures are estimates for FY2025-26.

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