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Salary Sacrifice

Salary sacrifice is an arrangement where you agree to forego part of your future salary or wages in return for your employer providing benefits of a similar value. You can sacrifice your salary or wages into a variety of benefits including super. Salary sacrifice contributions are ‘pre-tax’ contributions and are therefore subject to the concessional contributions cap as noted on the Concessional page of this website.

Tax Advantages
You can reduce your individual tax by salary sacrificing. This is because the salary you sacrifice to put in super will only be taxed at 15% within the super fund, saving you from paying tax at your individual tax rate which may be as high as 45%. 
For example, say your taxable income is $95,000 (so your tax rate is 37% for each dollar over $80,000 for the 2011-12 year) and you decide to salary sacrifice $15,000. Your SMSF will pay contribution tax of $2,250 (15% of the $15,000 contributed), however you will save $5,550 in individual tax (37% of the $15,000 sacrificed). The net result is a tax saving of $3,300 ($5,550 - $2,250) to you.