The Fine Print Australia · PUBLISHED 26 JUN 2026 · VERIFIED 26 JUN 2026 · AU EDITION

Salary Sacrifice Concessional Cap Trap That Hits High Earners 🇦🇺

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A high earner can put too much into super by salary sacrifice and end up paying extra tax if they go over the $30,000 concessional cap, which includes employer SG plus salary sacrifice contributions.

The number that matters

The central number is $30,000: the annual concessional contributions cap for super in 2025/26, which includes employer Superannuation Guarantee and salary sacrifice contributions.

How it quietly costs you

The first quiet money leak is that salary sacrifice only works cleanly if you stay within the concessional cap; once your employer SG plus salary sacrifice exceeds $30,000, the excess is taxed at your marginal rate instead of the intended concessional treatment.

The ATO says salary sacrificed super is meant to be additional to SG, but the cap still applies to the combined total of concessional contributions. AustralianSuper warns that if your total income plus before-tax contributions exceed $250,000, the Division 293 additional tax can apply, raising the tax on concessional contributions from 15% to 30% for affected high earners.

• Old vs better: letting salary sacrifice push you over the cap can trigger extra tax; staying under the cap preserves the 15% concessional rate.
• Quantified impact: on the over-cap portion, the tax treatment can become materially worse than the intended 15% concessional rate, and for some high earners it can rise to 30% under Division 293.

The second, compounding trap

A second layer is the opportunity cost of not using salary sacrifice strategically earlier in the year: if you wait until late in the financial year, you can miss months of pre-tax compounding and also lose the ability to plan contributions around employer SG.

The ATO makes clear that salary sacrifice only works when the arrangement is set up before the work is performed, and you cannot access the sacrificed amount as cash. That means a late start can permanently reduce the amount shifted from a higher marginal tax rate into super’s 15% tax environment for that year.

• Long-run cost: the gap between your marginal tax rate and 15% is the annual tax saving you forfeit on every dollar not salary sacrificed.
• Concrete example: Wealthlab says someone on $120,000 who sacrifices $15,600 can save about $3,744 in income tax in one year, showing how delaying or skipping the strategy can quickly cost thousands.

What this looks like in practice

Priya, age 41, is a Sydney project manager earning $135,000 a year, with $180,000 in super, in an industry super fund, and about 24 years to retirement.

• She discovers that putting pre-tax salary into super can save tax at the difference between her marginal rate and the 15% contributions tax, which is far better than leaving the money in pay.
• She discovers that the combined concessional cap is only $30,000, so her employer SG plus salary sacrifice must be monitored carefully to avoid excess-tax treatment.
• She discovers that if her total income plus before-tax contributions exceeds $250,000, Division 293 can lift the tax on those concessional contributions from 15% to 30%.

The full cost of doing nothing

For Priya, the combined effect of missing the 15% concessional treatment and mismanaging the $30,000 cap can easily add up to several thousand dollars a year in lost tax efficiency, with one cited example showing $3,744 of annual income-tax saving on a single salary-sacrifice decision.

Using Wealthlab’s example as a modelling anchor, if Priya made a similar-sized sacrifice and captured roughly $3,744 per year in tax savings over 24 years, the headline lifetime tax benefit would be about $89,856 before investment growth, assuming the annual saving stayed constant. This is a simple straight-line model, not a forecast, and it excludes super fund earnings and any future tax-rule changes.

What to do about it

• Check your concessional cap in myGov/ATO Online Services by reviewing your super contributions and employer SG totals.

1. Log in to myGov and open ATO online services.
2. Go to your super or contribution history section.
3. Add employer SG and any salary sacrifice to see whether you are near $30,000.

• What good looks like: your total concessional contributions stay at or below $30,000.

• Calculate whether salary sacrifice beats your marginal rate using the ATO’s salary-sacrifice guidance.

1. Open the ATO’s Salary sacrificing for employees page.
2. Compare your marginal tax rate with the 15% contributions tax.
3. Estimate the tax saved on each sacrificed dollar and check whether Division 293 could apply near $250,000.

• What good looks like: each sacrificed dollar should face 15% inside super rather than your higher marginal rate, unless Division 293 applies.

• Review your contribution timing with the ATO’s super contribution records before the end of the financial year.

1. In ATO Online, check year-to-date employer and personal concessional contributions.
2. Confirm your salary sacrifice arrangement was entered before the work was performed.
3. Adjust future payroll deductions so the cap is not overshot.

• What good looks like: no excess concessional contributions and no retroactive salary-sacrifice arrangement.

A myth worth clearing up

Myth: “Salary sacrifice is always tax-free and always better the more you do.”

Fact: Salary sacrifice is taxed at 15% in super, but only up to the $30,000 concessional cap; above that, or where Division 293 applies above $250,000 income plus concessional contributions, the tax outcome worsens.

Sources

• ATO

Researched 2026-06-26.

Corrections & disclosure: an AI-assisted, human-reviewed guide. Every figure is dated and sourced above. Spot something out of date or wrong? Tell us and we’ll correct it — corrections are noted here and in the video description.