How to set up salary sacrifice and where your pay sits against the Australian full-time average
Salary sacrifice is a common way to reduce your taxable income by swapping part of your pre-tax salary for benefits. But how does it affect where you stand on the national full-time average line? This guide explains the setup process and what it means for your pay comparison.
What is salary sacrifice?
Salary sacrifice (also called salary packaging) is an arrangement between you and your employer. You agree to forgo a portion of your salary in return for benefits such as:
- Additional superannuation contributions
- A car through a novated lease
- Electronic devices (laptops, phones)
- Childcare fees
- Other approved items
The sacrificed amount is deducted from your gross salary before tax is calculated. This lowers your taxable income, so you pay less income tax and Medicare levy. However, some benefits may attract fringe benefits tax (FBT), which your employer may choose to pass on to you.
How to set up salary sacrifice
Setting up salary sacrifice involves a few clear steps:
- Check with your employer – Not all employers offer salary sacrifice. Ask your HR or payroll department if they have a salary packaging policy.
- Choose a benefit – Decide what you want to sacrifice for. Common choices are extra super (which is FBT-free up to certain limits) or a car. The ATO sets rules on what is allowed.
- Get a quote – For benefits like a car lease, obtain a quote from a provider. Your employer may have preferred suppliers.
- Sign an agreement – You must have a written agreement in place before you earn the income you are sacrificing. The agreement should state the amount sacrificed, the benefit provided, and any costs you will bear (like FBT).
- Your employer deducts the amount – Each pay cycle, your employer takes the sacrificed amount from your pre-tax salary and provides the benefit or pays it to a third party.
- Report on your tax return – Your employer will report the reportable fringe benefits amount on your payment summary. This may affect some government benefits or the Medicare levy surcharge.
It is wise to consult a tax professional or use the ATO's online resources to understand the implications for your situation.
Where your pay sits against the full-time average
The national full-time adult ordinary-time average is $2,083.70 per week, or about $108,352 per year (ABS Average Weekly Earnings, May 2026). This is the line on this site. When you place a salary on the line, you enter your yearly salary before tax. That figure should be your gross remuneration – including any amounts you sacrifice.
For example, if your gross salary is $120,000 and you sacrifice $15,000 into super, your taxable income becomes $105,000. But the line still compares your gross $120,000 to the average. So you sit above the line. Your take-home pay is lower than someone earning $120,000 without sacrifice, but your total package (salary plus super) is the same.
How sacrifice affects the comparison
Because the line uses pre-tax salary, salary sacrifice does not change your position on the line. However, it does affect your net income and tax bracket. The 2026–27 tax rates are:
- Nil up to $18,200
- 15% from $18,201 to $45,000
- 30% from $45,001 to $135,000
- 37% from $135,001 to $190,000
- 45% above $190,000
Plus the Medicare levy of 2% (before any reductions). By reducing your taxable income, you may drop into a lower bracket or reduce the amount taxed at higher rates. This can increase your after-tax income relative to your gross salary.
Other benchmarks to consider
While the full-time average is $108,352, other figures give context:
- Full-time median: about $90,532 (ABS Employee Earnings, August 2025) – half of full-time workers earn less than this.
- All-employees median: about $74,100 – includes part-time and casual workers.
- Men's full-time average: about $113,412; women's: about $100,594.
- National minimum wage (from 1 July 2026): $26.44 per hour, $1,004.90 per week, about $52,255 per year on a 38-hour week.
State averages also vary. For instance, the ACT has the highest full-time average at about $119,090, while Tasmania is lowest at about $96,008. You can explore states and territories to see how your location compares.
What the line does not show
The line is a snapshot of average ordinary-time earnings. It does not include overtime, bonuses, or non-cash benefits. Salary sacrifice benefits (like a car) are part of your total remuneration but are not cash earnings. The how the figures are set page explains the methodology behind the ABS data.
If you are considering salary sacrifice, remember that it can be a smart way to boost super or get tax-effective benefits. But it does not move your gross salary on the line – your position relative to the average stays the same. What changes is your tax bill and take-home pay.
Final thoughts
Setting up salary sacrifice is straightforward once you have employer support. The key is to have a written agreement and understand the tax consequences. Your gross salary – the figure you enter on this site – remains the benchmark for comparing against the national full-time average. Use the guides for more on salary packaging and tax planning.