What Can You Salary Sacrifice in Australia? Understanding Your Weekly Packet

What Can You Salary Sacrifice in Australia?

When you ask what can you salary sacrifice in Australia, you are really asking which pre-tax benefits your employer can offer and how those benefits affect your weekly packet. Salary sacrifice is an arrangement where you give up part of your pre-tax salary in exchange for benefits such as extra super contributions, a car, or electronic devices. The key is that the sacrifice reduces your taxable income, so you pay less tax, but the benefits themselves may be subject to fringe benefits tax (FBT) unless exempt.

The Legal Minimum and Salary Sacrifice

First, it is important to understand the pay floor that applies to you. The national minimum wage, set by the Fair Work Commission, is $26.44 per hour or $1,004.90 per week for adult employees from 1 July 2026. This is the legal minimum for award-free and agreement-free national-system employees. However, many workers are covered by a modern award or enterprise agreement that sets a higher minimum rate. For example, the lowest ongoing classification under a modern award cannot be below $26.44 per hour, and introductory rates (first six months) are $25.74 per hour. Juniors, apprentices, and trainees have their own percentage-based rates.

Salary sacrifice cannot reduce your cash wages below these legal floors. The Fair Work Ombudsman explains that your total remuneration package must still meet the minimum pay requirements. So if you are on the national minimum wage, you cannot sacrifice any of your cash salary because you are already at the floor. But if you earn above the minimum, you may be able to sacrifice a portion.

How Super Guarantee Fits In

On top of your ordinary time earnings, your employer must pay super guarantee at 12% (from 2026-27). This is an employer cost, not deducted from your salary. However, salary sacrifice into super is common: you can ask your employer to contribute additional amounts from your pre-tax salary into your super fund. These extra contributions are taxed at 15% within the fund (up to the concessional cap), which is often lower than your marginal tax rate. This is one of the most popular salary sacrifice options because it boosts retirement savings while reducing current tax.

Tax and Medicare Considerations

For the 2026-27 tax year, resident tax rates apply with the full tax-free threshold. Medicare levy is 2% once your annualised ordinary gross income reaches $30,000. Salary sacrifice reduces your taxable income, which can lower the amount of tax and Medicare you pay. However, this site does not provide tax advice; you should consult the ATO or a tax professional. The chart above shows the average full-time adult ordinary-time earnings of $2,083.70 per week (ABS May 2026), compared to the national minimum of $1,004.90. If you earn near the average, salary sacrifice can be a useful tool to manage your tax position.

Award and Agreement Rates

If you are covered by a modern award or enterprise agreement, your minimum pay is likely higher than the national minimum. For example, many awards have multiple classification levels. The award backstop ensures that no classification falls below $26.44 per hour. Salary sacrifice arrangements must still comply with the award terms. Some awards may have specific clauses about salary sacrifice, so check your award or agreement. The Fair Work Ombudsman provides guidance on this.

What Items Can Be Salary Sacrificed?

Common salary sacrifice items include:

• Additional super contributions (above the 12% guarantee)
• Novated leases for cars (including running costs)
• Work-related equipment like laptops, tablets, or tools
• Childcare fees (if offered by your employer)
• Health insurance (if part of a salary packaging arrangement)

Not all employers offer salary sacrifice, and the items allowed depend on your employer's policy. Some benefits, like cars, may attract FBT, which can reduce the tax advantage. The ATO has rules to prevent salary sacrifice from being used to avoid tax excessively.

How to Compare Your Pay

To understand where you stand, first identify your applicable minimum: check if you are award-free or covered by a modern award. Use the Which minimum wage applies page to determine your classification. Then compare your current cash salary to the relevant floor. If you are above the floor, you may have room to salary sacrifice. Remember that the national minimum is just a starting point; many workers earn more due to awards, agreements, or market rates.

For a broader view, the ABS average earnings figure gives a sense of typical full-time pay. But your own situation depends on your industry, role, and experience. Salary sacrifice is a personal financial decision that should be made with an understanding of your total remuneration package, including super and any fringe benefits.

Final Points

• The national minimum wage is $26.44 per hour or $1,004.90 per week for adults (from 1 July 2026).
• Super guarantee is 12% on top of ordinary time earnings.
• Salary sacrifice cannot reduce cash pay below the legal minimum.
• Award and agreement rates may be higher and must be respected.
• This site provides orientation only; it is not a pay determination, tax advice, or legal advice.

For more detailed information, see the Rate tables and Guides sections. Always consult the Fair Work Ombudsman for enforcement questions and the ATO for tax matters.