What is salary sacrifice and is it a fringe benefit?
Salary sacrifice is an arrangement where an employee agrees to forgo part of their pre-tax salary in exchange for a non-cash benefit provided by their employer. Common examples include a car, laptop, or additional superannuation contributions. Under Australian tax law, salary sacrifice is indeed a fringe benefit, governed by the Fringe Benefits Tax Assessment Act 1986 and administered by the Australian Taxation Office (ATO). The sacrificed amount is generally subject to fringe benefits tax (FBT), which the employer pays, though some benefits (like extra super) are exempt or concessional.
How salary sacrifice compares to the national 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 figure represents gross salary before any salary sacrifice. When you enter a salary sacrifice arrangement, your gross salary (the amount you and your employer agree on) remains the benchmark for comparison against the average. The sacrificed portion is not counted in the ABS earnings figures, so your headline salary is what matters for the line on this site.
For context, the full-time median salary is about $90,532 per year (ABS Employee Earnings, August 2025), and the all-employees median is about $74,100. The national minimum wage from 1 July 2026 is $26.44 per hour, $1,004.90 per week, or about $52,255 per year on a 38-hour week. Award minimums rose by 4.75% from that date.
Tax implications of salary sacrifice
Salary sacrifice reduces your taxable income, which can lower the amount of income tax you pay. The 2026–27 resident 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; and 45% above $190,000. The Medicare levy of 2% applies before any reductions. However, the sacrificed amount may be subject to FBT, which is paid by your employer. Some employers pass on the FBT cost by reducing your salary package, so it is important to understand the net effect on your take-home pay.
State-by-state averages and salary sacrifice
State full-time averages vary, and salary sacrifice can affect how your pay compares locally. For example, the Australian Capital Territory has the highest full-time average at about $119,090, while Tasmania has the lowest at about $96,008. If you salary sacrifice, your gross salary (before sacrifice) is what is compared to these state averages. The sacrificed amount does not change your state ranking, but it does affect your taxable income and net pay. For more details on state figures, see our States and territories page.
Salary sacrifice and the line on this site
When you Place a salary on the line, the tool uses your gross yearly salary before tax. It then calculates a weekly and hourly figure based on a 38-hour week, and shows the distance from the national full-time average. If you have a salary sacrifice arrangement, enter the gross salary (the amount before any sacrifice) to get an accurate comparison. The sacrificed portion is a fringe benefit and is not part of the earnings measure used by the ABS.
Common questions about salary sacrifice and fringe benefits
Is salary sacrifice always a fringe benefit?
Yes, in most cases. The ATO considers salary sacrifice as a fringe benefit because the employee receives a non-cash benefit in lieu of salary. However, some benefits are exempt from FBT, such as superannuation contributions above the compulsory Super Guarantee (up to the concessional cap) and certain work-related items. Always check with your employer or a tax professional.
Does salary sacrifice affect my superannuation?
Yes, if you salary sacrifice into super, those contributions count towards your concessional contributions cap ($27,500 for 2026–27). They are taxed at 15% in the fund, which is usually lower than your marginal tax rate. This can be a tax-effective way to boost your retirement savings. However, salary sacrifice for super is still a fringe benefit, though it is exempt from FBT.
How do I know if my salary sacrifice is worth it?
Compare the value of the benefit you receive with the tax you save. Use the ATO's online calculators or speak to a financial adviser. Remember that the national full-time average is a benchmark for gross salary, not net pay. Salary sacrifice can reduce your taxable income, but it may also lower your gross salary for purposes like loan applications or the line on this site. For more guidance, see our Guides section.
Key sources
The figures in this article come from the Australian Bureau of Statistics (ABS) Average Weekly Earnings, May 2026, and Employee Earnings, August 2025. The minimum wage is from Fair Work, effective 1 July 2026. Tax rates are from the ATO for 2026–27. For more on how these figures are set, visit How the figures are set.