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Salary Sacrifice vs Invest Calculator

Updated for FY2025-26

Compare salary-sacrificing extra dollars into super versus taking them as cash and investing outside super. See the after-tax difference at the end of your horizon, the impact of the super lockup if you retire before 60, and how the answer shifts as your marginal rate changes. Built for Australian super and tax rules including Division 293 and the 50% CGT discount.

Marginal tax rate (FY25-26 brackets)

Auto-derived from salary. Click any chip to override.

Salary Sacrifice vs Invest

Salary-sacrificing $5000/yr for 25 years leaves you with $83k more than investing outside super (42% better).

Sacrifice to super

Pre-tax
$125,000
Net into account
$106,250
Balance
$278,058
Tax at exit
tax-free
Net wealth
$278,058
In today's $
$149,982

(net at horizon)

Invest outside super

Pre-tax
$125,000
Net into account
$87,500
Balance
$214,269
Tax at exit
$19,015
Net wealth
$195,254
In today's $
$105,318

(net at horizon, after CGT)

3560
SuperNon-superwinner: super

Sensitivity at other marginal rates

16%

+$25,672

30%

+$82,804

37%

+$108,728

45%

+$136,352

Simplified model: single marginal rate, single yield share across the horizon, no per-year cost-base tracking on reinvested yield, no LISTO, no HECS or Medicare nuance. The full ProjectFi planner refines this with annual tax-drag and cost-base tracking, bracket-by-bracket calculation, partner balances, and Monte Carlo sensitivity. Try the full planner

How salary sacrifice vs invest works

Australian super has a structural tax advantage on the way in: concessional contributions (employer SG, salary sacrifice, personal deductible) are taxed at 15% inside the fund instead of your marginal income tax rate. For someone in the 30% bracket, that's a 15-cent advantage on every pre-tax dollar routed through super. For the 45% bracket, it's 30 cents.

On the way out, super withdrawn after preservation age (60 for everyone born after 1 July 1964) is tax-free. By contrast, money invested outside super pays income tax on dividends and distributions each year and capital gains tax on disposal (with a 50% discount for holdings over 12 months).

The four FY2025-26 marginal-rate brackets

(The previous 32.5% bracket was removed by the Stage-3 cuts effective 1 July 2024 and the 30% bracket was widened. The calculator uses the current FY25-26 brackets via the engine constants, so it auto-rolls over when FY26-27 lands.)

How Division 293 changes the picture for high earners

When your combined Division 293 income (taxable income + concessional contributions) exceeds $250,000, an extra 15% tax applies to the lesser of (a) your concessional contributions and (b) the amount over the threshold. This halves the contribution-tax advantage of super for high earners (15% becomes effectively 30% on the over-threshold portion).

One subtle property: salary sacrificing reduces your taxable income by the same amount it raises your concessional contributions. The combined Div 293 income stays the same — only the CC amount in the min(CC, excess) formula moves. So adding sacrifice doesn't always increase Div 293 tax; it depends on which side of that min() you're on. The calculator computes the incremental change correctly via the engine helper, not via a flat surcharge approximation.

The AU lockup constraint

Super is locked until preservation age (60). The calculator detects when your horizon ends before preservation and projects the super balance forward (no further contributions) to age 60 for an apples-to-apples comparison. The lockup warning makes it clear that even if super wins the dollar comparison, you can't access the money before 60.

Worked example 1: middle bracket (FY2025-26)

Sam is 35, on $90,000 salary (30% marginal rate per FY25-26 brackets), considering $5,000/yr salary sacrifice over 25 years at 7% return. End age 60 is preservation age, so super accessible at horizon end with tax-free withdrawal.

Sam's super path: $5,000 sacrificed × (1 − 15% CC tax) = $4,250 net per year flowing into super. No Div 293 (combined income is well under $250k). At 7% over 25 years with mid- year contribution timing, the super balance reaches about $278,000 at age 60, available tax-free.

Sam's non-super path: $5,000 × (1 − 30% income tax) = $3,500 net per year invested outside super. With 1.5% annual yield (typical index ETF) taxed at 30% and the rest deferred to disposal, the effective compounding rate is about 6.55%. After 25 years the balance reaches about $202,000, with CGT on the gain (50% discount × 30% MR = 15% effective) leaving about $195,000 net.

Result: salary sacrifice wins by about $83,000 (42% better), and the money is accessible at horizon end.

Worked example 2: top bracket with Div 293

Alex is 40, on $230,000 salary (45% marginal). At $230k income with 12% SG of $27,600 the existing CC count is below the $30,000 cap, leaving $2,400 of headroom for sacrifice without breaching the cap. Combined Div 293 income = $230k + $27.6k = $257.6k, so Div 293 already applies on $7,600 of contributions ($257.6k − $250k threshold). Adding the $2,400 sacrifice doesn't change the combined Div 293 income (taxable drops by $2,400, CC rises by $2,400) so the incremental Div 293 from this sacrifice is zero, because the min(CC, excess) formula picks the same value either way.

Alex's super path over 20 years at 7%: about $86,500 tax-free (already past preservation at horizon end since current age 40 + 20 = 60). Non-super path with 45% income tax + CGT: about $46,000 net. Salary sacrifice wins by about $40,000 (88% better). Even with Div 293 already triggered on the baseline, this incremental sacrifice still benefits from the full 30-cent contribution-side advantage.

Sources and references

Australian super preservation age: ATO preservation age table. Concessional contributions and tax: ATO concessional contributions cap. Division 293: ATO Division 293 tax. CGT 50% discount: Income Tax Assessment Act 1997 (Cth) s115-25.

Want this comparison refined with annual tax-drag and cost- basis tracking on the non-super side, bracket-by-bracket calculation, partner balances, life events, and Monte Carlo sensitivity? The ProjectFi planner handles all of that.

FAQ

Why does salary sacrifice usually win?
Concessional contributions are taxed at 15% inside super on the way in, vs your marginal income tax rate on the way out (16%, 30%, 37%, or 45% in FY2025-26). For most working Australians, this 15% wedge is well below their marginal rate, so dollars routed through super arrive in the fund with more of them intact than dollars taken as take-home pay. Once over preservation age (60), super withdrawals are tax-free.
When does salary sacrifice STOP winning?
Two main cases. (1) Marginal rate near 15%: the contribution-tax wedge disappears, and the CGT discount outside super starts to favour non-super investments. (2) You need the money before age 60: super is locked, so even if it would compound to more, you can't spend it. The calculator surfaces both states.
What's the concessional contribution cap?
For FY2025-26 the cap is $30,000 across all concessional contributions (employer SG plus salary sacrifice plus personal deductible). Going over triggers excess contributions tax: the excess is added to your taxable income and taxed at your marginal rate, with a 15% offset for the contributions tax already paid. The Concessional Super Cap Calculator handles this in detail, including carry-forward of unused cap.
What is Division 293 and when does it apply?
Division 293 adds an extra 15% tax on concessional contributions when your combined Division 293 income (taxable income + reportable employer super + investment losses + reportable fringe benefits + concessional contributions) exceeds $250,000. The threshold is fixed (not indexed). The 15% surcharge applies to the lesser of (a) your concessional contributions and (b) the amount your combined income exceeds $250k. So for a $230k salary with $30k SG, combined Div 293 income is $260k and the surcharge applies to only $10,000 of contributions, not all $30k. The calculator computes this incrementally for the salary-sacrifice scenario using the canonical Div 293 formula.
Why does the calculator split between annual yield tax and CGT at disposal?
The non-super path models two return components: annual yield (dividends and distributions, taxed at your marginal rate each year) and deferred capital growth (taxed only when you sell, with a 50% CGT discount for holdings over 12 months under s115-25 ITAA97). The default yield share is 1.5% (typical AU index ETF). For REITs or dividend-heavy holdings, slide it higher (3-5%); for pure-growth holdings, lower (0%). The full planner refines this with per-year cost-base tracking on reinvested yield.
What if I'm under 60 at the end of my horizon?
The calculator detects this and projects your super forward (no further contributions) to age 60 for an apples-to-apples comparison. The result shows what each path would be worth at age 60, plus a lock-up warning that super is not accessible before then. If you need access to money before 60, the non-super path is your only option regardless of which path wins the dollar comparison.
What about LISTO, HECS, and Medicare Levy?
Out of scope for v1. LISTO (Low Income Super Tax Offset) refunds the 15% CC tax up to $500 for income under $37k, adding further super advantage for low earners. HECS repayment income includes salary-sacrificed amounts (so sacrificing doesn't cut your HECS bill). Medicare Levy and MLS apply to both paths' taxable income equally so they don't change the comparison. The full ProjectFi planner handles all three precisely.

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Division 293 Tax Calculator

Does Division 293 apply to your concessional contributions this FY? Shows the extra tax dollars and the threshold headroom.

Super Balance Projection Calculator

Project your super balance forward to retirement. See where it lands at 60, 65, and 75 with employer SG, voluntary contributions, and the 15% concessional tax baked in.

See how this choice plays out across 1,000 Monte Carlo runs

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Try the planner →