By Philippa Billings, Chief Advice Officer, Otivo
Salary sacrifice and after-tax contributions both end up in the same place, your super, but they get there through different doors and are taxed in different ways. That difference is easy to gloss over and important to understand, because it shapes which suits your situation. Here's how the two compare, and what tends to point people towards one or the other.
Salary sacrifice uses before-tax income and is generally taxed at 15% going into super, counting towards the concessional cap of $32,500 for 2026-27. After-tax contributions use money you've already paid tax on. As at July 2026, some after-tax contributions can be claimed as a personal deduction, while others stay non-concessional, and the right choice depends on your tax position and cap room.
What's the difference between the two?
It comes down to when the money is taxed. Salary sacrifice redirects part of your before-tax pay into super, where it's generally taxed at 15% rather than your marginal rate. After-tax contributions come from money that's already been taxed at your marginal rate. Within after-tax contributions there's a further split, you can claim some as a personal tax deduction, which makes them concessional, or leave them as non-concessional. Understanding which door a contribution goes through is the key to comparing them.
How is each taxed?
Salary sacrifice and personal deductible contributions are concessional, generally taxed at 15% as they enter the fund, which is where their tax efficiency comes from for most people. Non-concessional contributions, made from after-tax money without claiming a deduction, aren't taxed again on the way in, since you've already paid tax on that money. For very high earners, Division 293 adds an extra 15% on concessional contributions above a $250,000 combined-income threshold, taking the tax on those to 30%, though they remain concessionally taxed.
What caps apply to each?
Different caps govern the two types. Concessional contributions, which include salary sacrifice, employer super guarantee and personal deductible contributions combined, share the $32,500 cap for 2026-27. Non-concessional contributions have their own separate cap of $130,000 for 2026-27, with a bring-forward option for eligible people under 75. Keeping the two caps distinct matters, because they're tracked separately and exceeding either has its own consequences.
What's the notice of intent, and when does it matter?
It matters for personal deductible contributions specifically. If you make an after-tax contribution and want to claim it as a tax deduction, turning it into a concessional contribution, you must lodge a valid notice of intent with your fund and have it acknowledged, before the earlier of the day you lodge your tax return for that year or the end of the following financial year. Salary sacrifice doesn't need this, since it's arranged through your employer. Miss the notice, and the deduction can't be claimed.
Which tends to suit which situation?
Salary sacrifice suits people who want a straightforward, regular before-tax contribution arranged through their employer. Personal deductible contributions suit those who prefer to contribute from their own funds and claim the deduction, useful for the self-employed or for one-off amounts. Non-concessional contributions suit people wanting to add larger after-tax sums, such as an inheritance, beyond the concessional cap. Many people use a combination, and the right mix depends on your income, tax position and how much room remains in each cap.
Frequently asked questions
Is salary sacrifice or after-tax better?
Neither is universally better, since they use different doors with different tax treatment. Salary sacrifice uses before-tax income taxed at 15%, while after-tax contributions use money already taxed, some of which can be claimed as a deduction. The right choice depends on your situation.
Do after-tax contributions get a tax deduction?
Only if you claim them as personal deductible contributions and lodge a valid notice of intent with your fund, which makes them concessional. After-tax contributions left as non-concessional aren't deductible, since you've already paid tax on that money.
Can I do both salary sacrifice and after-tax contributions?
Yes, and many people do, subject to the separate caps, $32,500 concessional and $130,000 non-concessional for 2026-27. The right combination depends on your income, tax position and how much cap room you have.
Where to from here
Choosing between the doors is really about your tax position and cap room. Otivo, a licensed Australian financial advice platform holding AFSL and Australian Credit Licence No. 485665, offers a salary sacrifice contributions module that helps you weigh how adding to super could work for you, based on your income, age and expenses. It helps you compare the routes for your situation.
Sources
- Australian Taxation Office — concessional and non-concessional contributions, notice of intent and Division 293 — ato.gov.au
- ASIC MoneySmart — types of super contributions — moneysmart.gov.au
Disclaimer
The information in this communication is current as at July 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.