Salary sacrifice goes in before tax — taxed at just 15% instead of your marginal rate — and grows in a low-tax environment. But it's locked until age 60. Paying down the mortgage uses after-tax dollars but stays flexible. This compares the same pre-tax amount into each, to your retirement age.
Your situation
37% marginal · $12,000 sacrifice room
Your mortgage
Super & salary sacrifice
Before the 15% earnings tax
Pre-tax · $12,000 total room under the $30,000 cap
A personal deductible contribution
Above the concessional cap
Your sacrifice exceeds the $30,000 before-tax cap (after employer super). Only $12,000/yr can be salary sacrificed — the comparison below uses that amount. Contributing more incurs extra tax.
After 15 years, at age 60
Salary sacrifice comes out ahead by $73,929
Super balance added
$244,309
Accessible at retirement
Mortgage paid down
$170,380
Guaranteed 6.0%, fully flexible
Wealth added by the same pre-tax money, year by year
Employer super (12% SG) goes in under either choice, so it's left out — this is only the wealth the decision itself creates.
Year-by-year balances
The actual loan owing and super built under each choice.
| Year | Pay down mortgage | Salary sacrifice | ||
|---|---|---|---|---|
| Owing | Invested | Owing | Super | |
| 2026 | $385k | $0 | $393k | $10k |
| 2027 | $370k | $0 | $385k | $21k |
| 2028 | $353k | $0 | $377k | $33k |
| 2029 | $336k | $0 | $368k | $45k |
| 2030 | $318k | $0 | $359k | $58k |
| 2031 | $298k | $0 | $349k | $72k |
| 2032 | $277k | $0 | $339k | $87k |
| 2033 | $255k | $0 | $328k | $102k |
| 2034 | $232k | $0 | $316k | $119k |
| 2035 | $207k | $0 | $304k | $137k |
| 2036 | $181k | $0 | $291k | $156k |
| 2037 | $154k | $0 | $277k | $176k |
| 2038 | $124k | $0 | $262k | $197k |
| 2039 | $93k | $0 | $247k | $220k |
| 2040 | $60k | $0 | $230k | $244k |
Owing = loan balance; Invested = cash redirected to investing after the loan clears; Super = balance built from salary sacrifice (net of 15%/30% contributions tax).
Tax on the super option, year by year
Sacrificed money is taxed going in (15%, or 30% for high earners under Division 293), and the fund's earnings are taxed 15% every year. There's no capital gains tax — super is tax-free once you can access it.
| Year | Contributions tax | Earnings tax (15%) |
|---|---|---|
| 2026 | -$1,800 | $0 |
| 2027 | -$1,800 | -$115 |
| 2028 | -$1,800 | -$237 |
| 2029 | -$1,800 | -$367 |
| 2030 | -$1,800 | -$505 |
| 2031 | -$1,800 | -$652 |
| 2032 | -$1,800 | -$808 |
| 2033 | -$1,800 | -$974 |
| 2034 | -$1,800 | -$1,151 |
| 2035 | -$1,800 | -$1,339 |
| 2036 | -$1,800 | -$1,539 |
| 2037 | -$1,800 | -$1,752 |
| 2038 | -$1,800 | -$1,979 |
| 2039 | -$1,800 | -$2,220 |
| 2040 | -$1,800 | -$2,476 |
| Total tax | -$27,000 | -$16,113 |
The super balance in the table above is already net of all this tax — there's no CGT haircut to come. Total tax over 15 years: $43,113. Even so, 15% going in beats your marginal rate — that's the sacrifice advantage.
Where the money goes
into super
$12,000/yr sacrificed, taxed 15% in
$244,309
Mortgage side — after-tax equivalent
You keep 61c of each $1 after income tax
$7,320/yr
Super wins by
$73,929
Sacrificing pre-tax dollars at 15% instead of your marginal rate is a big head start, and super's low-tax growth compounds it. Since you retire at or after 60, you can access it when you need it.
Illustrative only. Assumes constant rates, super earnings taxed at 15%, and the same pre-tax amount into each option. Ignores insurance premiums in super and any change to caps or your income.
Why compare pre-tax amounts?
Salary sacrifice happens before income tax, so $1 sacrificed only costs you your after-tax take-home. To compare fairly, we take the same pre-tax dollar, send it to super (taxed 15% going in) in one scenario, or tax it at your marginal rate and put the take-home on the mortgage in the other.
What is the concessional cap?
You can put up to $30,000 of before-tax money into super each year (rising with indexation) — and that includes your employer's compulsory 12% super. Your salary sacrifice room is the cap minus that employer amount. Going over triggers extra tax.
What is Division 293?
If your income plus super contributions exceeds $250,000, contributions are taxed an extra 15% (30% total). That halves the tax advantage — the calculator applies it automatically for high earners.
Why does retiring before 60 matter?
Super is preserved until age 60. If you retire earlier, you can't draw on it yet — so even if sacrificing builds more wealth, you still need liquid money (like a paid-down mortgage or an offset) to live on until then.
Is salary sacrifice always better for high earners?
Usually the tax arbitrage is large — 15% in super vs up to 47% on salary. But a high mortgage rate, a short time horizon, Division 293, or needing the money before 60 can all tip it back toward the mortgage. Your numbers decide it.
Model super, mortgage and retirement together
WealthSpan runs salary sacrifice, Division 293, the concessional cap, offset and mortgage payoff across your whole life — and shows when super unlocks.
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