What is salary sacrifice?
Salary sacrifice is a voluntary arrangement between you and your employer. You agree to give up part of your pre-tax salary in return for non-cash benefits. Common examples include salary sacrificing into superannuation, a car (novated lease), or electronic devices. The key effect is that your taxable income is reduced by the amount you sacrifice, which can lower the tax you pay. However, the benefits you receive are often subject to fringe benefits tax (FBT) for your employer, though some items (like super contributions above the concessional cap) are exempt.
How salary sacrifice affects your pay
When you salary sacrifice, your employer deducts the agreed amount before tax is calculated. For instance, if your gross salary is $120,000 and you sacrifice $10,000 into super, your taxable income becomes $110,000. The ATO then taxes you on that lower amount. Your take-home pay may be higher than if you received the full $120,000 as cash, because you avoid the higher marginal tax rate on the sacrificed portion. But your reported salary for most comparisons—including the national full-time average—is the gross amount before sacrifice. This site uses the ABS Average Weekly Earnings figure of $2,083.70 per week ($108,352 per year) for full-time adult ordinary-time earnings, which is before any salary sacrifice.
Where your pay sits against the national average
If you salary sacrifice, your effective salary for comparison is the gross amount before sacrifice. So if your gross salary is $108,352, you are exactly on the national full-time average. If you sacrifice part of it, your taxable income drops below that figure, but your total remuneration (salary plus benefits) may still be at or above the average. The ABS does not adjust its average for salary sacrifice, so the line on this site reflects the pre-sacrifice figure. For a more personal comparison, you can place a salary on the line using your gross salary before sacrifice. The site also shows state averages: for example, New South Wales full-time average is about $109,658, Victoria about $106,137, and Western Australia about $115,825. Your salary sacrifice arrangement does not change which state average applies to you.
Salary sacrifice and the minimum wage
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. Salary sacrifice is not available to award-covered employees unless their award allows it, and it cannot reduce your pay below the minimum wage. Fair Work sets the minimum rates, and award minimums rose 4.75% from that date. If you are on the minimum wage, salary sacrifice is generally not an option because you cannot forgo pay that would take you below the legal minimum.
Tax implications of salary sacrifice
Salary sacrifice reduces your taxable income, which can move you into a lower tax bracket. For 2026–27, the 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. By sacrificing into super, you also pay only 15% tax on contributions (up to the concessional cap), which can be more efficient than your marginal rate. The ATO oversees these rules. Always check with your employer and check the how the figures are set for how these figures are used.
Medians and all-employees median
For context, the full-time median employee earnings are about $90,532, and the all-employees median is about $74,100 (ABS Employee Earnings, August 2025). These are medians, not averages, and are not affected by salary sacrifice in the same way because they are based on reported earnings. If you salary sacrifice, your reported earnings for median calculations are the gross amount before sacrifice. So your position relative to the median is based on your gross salary.
Summary
Salary sacrifice is a legitimate way to reduce tax and receive benefits, but it does not change the gross salary used to compare against the national full-time average. The average is $108,352 per year. Your salary before sacrifice is the figure to use when placing a salary on the line. If you are considering salary sacrifice, understand that it lowers your taxable income but not your total remuneration package. Always consult a tax professional or your employer for specific advice.