How does salary sacrificing a car affect my taxable income?

Salary sacrificing a car reduces your pre-tax income, lowering the amount of tax you pay. The Australian Taxation Office (ATO) allows you to package a car through a novated lease, with the lease payments and running costs deducted from your salary before tax. This can save you hundreds of dollars in tax each year, but it also reduces your super guarantee base and may affect your take-home pay. Always check the Fringe Benefits Tax (FBT) implications with your employer.

Does salary sacrifice affect my super guarantee?

Yes, because super guarantee is calculated on your ordinary earnings, which may be reduced by salary sacrifice arrangements. The super guarantee rate is 12% of your ordinary earnings, paid on top of your salary. If you salary sacrifice a car, your employer's super contribution may be based on the reduced salary, potentially lowering your retirement savings. However, you can also make additional voluntary contributions to offset this.

What is the difference between the National Minimum Wage and award rates?

The National Minimum Wage, set by the Fair Work Commission, is the minimum hourly rate for employees not covered by an award or agreement. From 1 July 2026 it is $26.44 per hour. Award rates are industry-specific minimums that often include penalty rates, allowances, and higher base pay. Many employees are covered by an award, so their minimum pay is higher than the National Minimum Wage. Casual employees also receive a 25% loading on top of the base rate.

How to Salary Sacrifice a Car: Hourly to Annual Pay Calculator Guide

For a 38-hour week, annual gross pay equals your hourly rate multiplied by 38 hours per week times 52 weeks.

How to Convert Your Hourly Rate to Annual Pay

Whether you're negotiating a salary, planning a budget, or wondering how to salary sacrifice a car, understanding your annual pay from an hourly rate is essential. The basic formula is straightforward: annual gross pay = hourly rate × hours per week × 52 weeks. For a standard full-time role, we assume 38 hours per week, as set by the Fair Work Ombudsman. This gives you a reliable estimate of your yearly earnings before tax and other deductions.

Using the Timesheet Calculator

Our the timesheet calculator lets you enter your base hourly rate. If you're a casual employee, tick the box to add 25% casual loading on top. Do not enter a rate that already includes casual loading—the calculator handles that for you. The tool then shows your annual gross, fortnightly pay, and estimated tax and super.

The 38-Hour Week and the Fortnight

Australia's standard full-time week is 38 hours, as defined by the Fair Work Act. To find your fortnightly pay, multiply your weekly pay by two. For example, if you earn $30 per hour:

Weekly: $30 × 38 = $1,140
Fortnightly: $1,140 × 2 = $2,280
Annual: $30 × 38 × 52 = $59,280

This assumes you work the same hours every week with no unpaid overtime, penalty rates, or allowances. If your hours vary, use an average.

National Minimum Wage vs Award Rates

The Fair Work Commission sets the National Minimum Wage—from 1 July 2026 it is $26.44 per hour, or $1,004.90 per week for 38 hours. Casual employees get 25% loading, making it $33.05 per hour. However, most workers are covered by an award or enterprise agreement, which often provides higher minimum rates. For example, the Hospitality Award or the Clerks Award have specific pay rates. Always check your award on the Fair Work Ombudsman website. The calculator uses the base rate you enter; it does not apply award rates automatically.

Super Guarantee Paid on Top

Your employer must pay super guarantee at 12% of your ordinary earnings, on top of your salary. For the $59,280 annual example, that's an extra $7,113.60 per year contributed to your super fund. The super guarantee has a maximum contribution base of $270,830 per year (2026–27). Earnings above that do not attract compulsory super. If you salary sacrifice a car, your ordinary earnings may reduce, lowering the super your employer pays.

Tax and Medicare Levy

For the 2026–27 financial year, the Australian Taxation Office (ATO) 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
45% above $190,000

Plus a 2% Medicare levy (based on 2025–26 single reduction thresholds, as 2026–27 thresholds were not confirmed here). The calculator estimates your tax using these brackets and the full tax-free threshold. It does not deduct HELP loans, the Medicare levy surcharge, or salary packaging.

How to Salary Sacrifice a Car

If you're wondering how to salary sacrifice a car, it involves a novated lease arrangement through your employer. You agree to have the car lease payments and running costs deducted from your pre-tax salary. This reduces your taxable income, so you pay less tax. For example, if your annual gross is $80,000 and you salary sacrifice $10,000 for a car, your taxable income drops to $70,000, saving you $3,000 in tax (at the 30% bracket). However, salary sacrifice affects your super guarantee base and may reduce your take-home pay. Use our super and packaging guide to understand the trade-offs.

Casual Loading and Award Rates

Casual employees receive a 25% loading on top of the base hourly rate, as per the Fair Work Ombudsman. This compensates for not receiving paid leave. If you're casual, the calculator adds this loading when you check the box. Award rates may also include penalty rates for weekends, nights, or public holidays. The calculator does not apply penalty rates—it uses a flat rate. For accurate award pay, refer to the pay guides on our site.

Average Weekly Earnings

The Australian Bureau of Statistics (ABS) reports Average Weekly Earnings (AWE) for full-time adult ordinary time as $2,083.70 per week (May 2026). All employees (including part-time) average $1,579.20 per week. These are averages, not medians for a specific job. Do not use them as a target for your role—your pay depends on your award, experience, and location.

Important Notes

This calculator provides an estimate only. It assumes the same rate every week, no unpaid overtime, no penalty rates, no allowances, and no salary sacrifice. Super is estimated at 12% of ordinary earnings, paid on top, up to the $270,830 maximum contribution base. Tax uses the 2026–27 resident scale with the full tax-free threshold. Medicare uses 2025–26 single reduction thresholds. HELP, Medicare levy surcharge, and salary packaging are not deducted. For a binding determination, consult a tax professional or the ATO.