--- title: Salary Sacrifice can make bankruptcy worse! description: How salary sacrifice can increase the amount you have to pay creditors in bankruptcy. image: https://www.beyonddebt.com.au/hubfs/Promo-Facebook-Facebook%20link%20image.jpeg --- ![Top bar image](https://www.beyonddebt.com.au/hubfs/Assets%202019/Top%20bar%20image.jpg "Top bar image") ###### ![](https://www.beyonddebt.com.au/hubfs/Assets%202019/Tv.svg)Did you see us on TV? - [Click Here](https://www.beyonddebt.com.au/debt-help) ![Close](https://www.beyonddebt.com.au/hubfs/Assets%202019/Close.svg "Close") [![Logo](https://www.beyonddebt.com.au/hs-fs/hubfs/Assets%202019/Images/Beyond%20Debt%20black.png?width=560&height=128&name=Beyond%20Debt%20black.png "Logo")](https://www.beyonddebt.com.au) [![Logo](https://www.beyonddebt.com.au/hs-fs/hubfs/Assets%202019/Images/Beyond%20Debt%20white.png?width=560&height=128&name=Beyond%20Debt%20white.png "Logo")](https://www.beyonddebt.com.au) #### [![Phone](https://www.beyonddebt.com.au/hubfs/Assets%202019/Images/Button%20Copy.svg)**1300 284 091**](tel:1300%20284%20091) #### [![Phone](https://www.beyonddebt.com.au/hubfs/Assets%202019/Images/Button%20Copy.svg)![](https://www.beyonddebt.com.au/hubfs/Beyond%20Debt%20October2017/small-icon.svg)**1300 284 091**](tel:1300%20284%20091) [![Free Consultation](https://no-cache.hubspot.com/cta/default/2583772/02eddd09-66a0-4e61-9e59-63ae64bfd94a.png)](https://cta-redirect.hubspot.com/cta/redirect/2583772/02eddd09-66a0-4e61-9e59-63ae64bfd94a) #### [1300 284 091](tel:1300%20284%20091) - ##### [Eliminate Debt](https://www.beyonddebt.com.au/blog/topic/eliminate-debt) [## How to Get Out of Debt in 2026: The Australian's Step-by-Step Guide (And Free Budget Planner) ](https://www.beyonddebt.com.au/blog/take-control-of-your-debt) [Read Article](https://www.beyonddebt.com.au/blog/take-control-of-your-debt) - ###### [Bankruptcy](https://www.beyonddebt.com.au/blog/topic/bankruptcy) # [Salary Sacrifice can make bankruptcy worse!](https://www.beyonddebt.com.au/blog/salary-sacrifice-can-make-bankruptcy-worse) - ###### Ben Paris - ###### 11 Apr 2022 ###### LATEST ARTICLES - Bankruptcy [Back to blog](https://www.beyonddebt.com.au/blog) - Share - [**](https://www.facebook.com/sharer/sharer.php?u=https%3A%2F%2Fwww.beyonddebt.com.au%2Fblog%2Fsalary-sacrifice-can-make-bankruptcy-worse) - [**](https://www.twitter.com/share?url=https%3A%2F%2Fwww.beyonddebt.com.au%2Fblog%2Fsalary-sacrifice-can-make-bankruptcy-worse) - [**](http://www.linkedin.com/shareArticle?mini=true&url=https://www.beyonddebt.com.au/blog/salary-sacrifice-can-make-bankruptcy-worse) Salary Sacrifice is a common strategy people use to reduce the amount of tax they pay. It's incredibly common for people in government or the charity sector to use salary sacrificing, sometimes called salary packaging. Salary sacrificing allows you to "sacrifice" some of your income before tax to pay for some expenses. How does it affect you in Bankruptcy? In bankruptcy, 50% of your after-tax income above a threshold goes to your creditors, these payments are referred to as income contributions. The more dependants (kids generally) you have, the more of your after-tax income you can keep. For example: if you have no dependants, you can earn $61,789 after-tax with 50% of everything you earn over that going towards your bankruptcy (government fees, trustee fees and repayments to your debts). If you earned $80,000 gross per year, that would be $63,533 after-tax which is $1,744 over the threshold. 50% of that or, $872 would go to your bankruptcy. Salary sacrifice reduces the amount of tax you have to pay, increasing the amount of after-tax income you have. This means you will have more money over the threshold and you will have to pay more to your bankruptcy. Using the above example. If you salary sacrificed $15,000 of your income, you would earn after-tax $53,408 in cash and have salary sacrificed $15,000, your total income is now $68,408. The threshold is $61,789, with $6,619 over the threshold. This is $4,875 more because of salary sacrifice. Which means you will pay $3,309.50 in contributions. While you are still better off technically, because the contributions will be have to be paid out of the cash component of your income this can cause a cash flow problem. In the above example the contribution would have to be paid out of the $53,408 leaving $50,099 to pay for every expense not covered by the salary sacrifice. What expense can be Salary Sacrificed? There are three classes of expenses that be salary sacrificed, with three different tax treatments. Category 1: Benefits Subject to Fringe benefits Benefits subject to Fringe Benefits tax can be sacrificed up to a limit of $9,010 for Health Care workers and up to $15,900 for charity workers. Examples: General Living Expenses, Mortgage or Rent, School Fees, Personal Loan Repayments Category 2: Uncapped Benefits There are some benefits that are uncapped including self-education, work-related expenses, professional memberships and in-house childcare. Category 3: Concessionally Taxed Benefits There are some benefits that are concessionally taxed these include a novated lease and remote super. ###### Ready to become debt free? #### Take the first step to a debt free future [Ready to become debt free?](https://info.beyonddebt.com.au/request-a-consultation) ### You might find these interesting - ##### [Bankruptcy](https://www.beyonddebt.com.au/blog/topic/bankruptcy) ## [What Happens to My Car in Bankruptcy?](https://www.beyonddebt.com.au/blog/what-happens-to-my-car-in-bankruptcy) - ###### Ben Paris - ###### 11 Mar 2022 - ##### [Bankruptcy](https://www.beyonddebt.com.au/blog/topic/bankruptcy) ## [What property is protected in bankruptcy?](https://www.beyonddebt.com.au/blog/what-property-is-protected-in-bankruptcy) - ###### Ben Paris - ###### 04 Feb 2022 - ##### [Bankruptcy](https://www.beyonddebt.com.au/blog/topic/bankruptcy) - ##### [Press Release](https://www.beyonddebt.com.au/blog/topic/press-release) ## [Morrison Government Throws Sole Traders Hospital Pass](https://www.beyonddebt.com.au/blog/morrison-government-throws-sole-traders-hospital-pass) - ###### Ben Paris - ###### 12 Apr 2021 - [Personal Finance Basics (126)](https://www.beyonddebt.com.au/blog/tag/personal-finance-basics) - [Handle Money (100)](https://www.beyonddebt.com.au/blog/tag/handle-money) - [Everyday Expenses (61)](https://www.beyonddebt.com.au/blog/tag/everyday-expenses) - [Affordable Living (50)](https://www.beyonddebt.com.au/blog/tag/affordable-living) - [Build Savings (33)](https://www.beyonddebt.com.au/blog/tag/build-savings) ## Ready to become debt free? #### Speak with one of our specialists to start your future [![About Beyond Debt](https://no-cache.hubspot.com/cta/default/2583772/e771166e-724a-4461-9ee9-fd819c4c0fe2.png)](https://cta-redirect.hubspot.com/cta/redirect/2583772/e771166e-724a-4461-9ee9-fd819c4c0fe2) [![Get Help](https://no-cache.hubspot.com/cta/default/2583772/8ac6a951-8425-44d9-91d4-0928fca0084e.png)](https://cta-redirect.hubspot.com/cta/redirect/2583772/8ac6a951-8425-44d9-91d4-0928fca0084e) #### [![Phone](https://www.beyonddebt.com.au/hubfs/Assets%202019/Images/Button%20Copy.svg)![](https://www.beyonddebt.com.au/hubfs/Beyond%20Debt%20October2017/small-icon.svg)**1300 284 091**](tel:1300%20284%20091) - ![Family-Owned-transparent-300x158](https://www.beyonddebt.com.au/hs-fs/hubfs/Assets%202019/Images/Family-Owned-transparent-300x158.png?width=115&name=Family-Owned-transparent-300x158.png) - ![pipa_logo_transparent_300w_100h](https://www.beyonddebt.com.au/hs-fs/hubfs/Assets%202019/Images/pipa_logo_transparent_300w_100h.png?width=151&name=pipa_logo_transparent_300w_100h.png) - ![Feefo](https://www.beyonddebt.com.au/hs-fs/hubfs/Feefo.png?width=115&name=Feefo.png) ##### Debt Help ##### Company ##### Resources Beyond Debt is a trading name of DCS Group Aust Pty Ltd. Australian Credit License: 382607. RDAA Number: 1126. PO Box 3074 Newstead, QLD, 4006. DCS Group operates under a Limited Liability scheme approved under Professional Standards Legislation [Privacy Policy](https://www.beyonddebt.com.au/privacy-policy)