TAX ESSENTIALS FOR EMPLOYEES • STEP 2 OF 4
See It: Sarah's Tax Discovery
An investment in knowledge pays the best interest.
Benjamin Franklin
Follow Sarah's tax return journey and see exactly how much she saved by claiming deductions.
Your Learning Journey
Your Learning Journey
This Step Takes: 20 minutes
Follow Sarah's journey, explore salary sacrifice benefits, and learn from real deduction examples.
What You'll Learn
See exactly what deductions a real employee can claim and how much they save. Understand the powerful impact of salary sacrifice on long-term wealth.
Real deduction examples and salary sacrifice impact on your wealth.
Sarah opens myTax for the first time. She could lodge it in 10 minutes, or spend time reviewing deductions: WFH 3 days/week, client meeting drives, a $1,200 professional development course, and phone/internet.
What Sarah Claimed (Best Path)
Here's the exact breakdown of Sarah's deductions that generated a $1,887 refund.
Work From Home
$1,536
Fixed rate method: 3 days/week × 8 hours × 48 weeks × $0.67/hour
Car & Travel
$1,700
Cents per km method: 2,000 km to client meetings × $0.85/km
Phone & Internet
$480
50% work use of phone plan ($50/mo) + internet ($30/mo)
Self-Education
$1,200
Digital marketing course directly related to current role
Total Deductions: $4,916
Tax Refund: $1,887
That's $1,887 that was already withheld from her pay, now back in her pocket!
The Salary Sacrifice Strategy
Sarah discovered an even bigger opportunity: salary sacrificing into super.
The Salary Sacrifice Secret
Sarah earns $85,000. She salary sacrifices $10,000extra into super each year. Here's what happens...
Without Salary Sacrifice
Annual Take-Home
$65,208
Super After 10 Years
$19,229
(Just employer SG contributions)
With Salary Sacrifice
Annual Take-Home
$58,658
(-$6,550 less cash)
Super After 10 Years
$38,900
(+$19,671 more!)
The Magic: Where the Benefit Comes From
Tax Saved
$3,450
Per year
Super Growth
$19,672
After 10 years
Net Benefit
$16,572
Total gain
The Secret: You pay 15% tax on super contributions instead of your marginal rate (32.5%). Plus, your super grows tax-free!
Assumptions: 7% annual super return, 10-year timeframe. Actual results vary based on market performance and personal circumstances.
The Full Tax Stack: Super vs Investing Outside Super
Same $10,000 extra per year. Same 20 years. Same 7% growth. The difference is where the tax hits — and when.
Based on a $120,000 income (32.5% marginal rate + 2% Medicare levy). 2025–26 ATO rates. Illustrative figures only — individual circumstances vary.
Pathway A
Invest Outside Super
Gross extra each year
Before any tax
− Income tax + Medicare
32.5% + 2% = 34.5% marginal rate
Net invested each year
Into ETFs / shares
After 20 yrs @ 7% p.a.
Compounded annually
− CGT on exit
50% discount applied, assessed @ 34.5%
In your hand after tax
~$236,550
Tax hits twice: on the way in and on the way out.
Pathway B
Salary Sacrifice into Super
Gross sacrifice each year
Pre-tax, before income tax is withheld
− Contributions tax
Flat 15% — not your marginal rate
Net invested each year
Working inside super
After 20 yrs @ 7% p.a.
Compounded annually
− CGT on withdrawal
Pension phase (after preservation age)
In your hand after tax
~$348,650
Tax hits once, at a lower rate — and nothing more at exit.
In this example
~$112,000 difference
Same dollars. Same growth rate. Same 20 years. The gap is driven by a lower contributions tax rate (15% vs 34.5%) and zero CGT on the way out of super — a combination that compounds significantly over two decades.
Important trade-offs to consider
- Access is locked — money in super is generally inaccessible until your preservation age (currently 60 for most Australians). Consider your short-to-medium term cashflow needs first.
- Concessional cap applies — the 2024–25 cap is $30,000/year (including your employer's Superannuation Guarantee). Contributions above the cap are taxed at your marginal rate.
- Rules can change — tax treatment of super has historically been favourable, but future policy changes are possible. Figures above reflect 2025–26 ATO rules.
- Personal circumstances vary — consider speaking with a registered financial adviser before making contribution decisions.
Key Insights
Track Everything
Use ATO Methods
Think Long-Term
💡 The Average Australian Misses $2,000+ in Deductions
ATO data shows most employees under-claim deductions because they don't track expenses or understand what's claimable. Don't be average!
Tax-101 for PAYG - See It: Complete
- Sarah saved $1,887 by claiming WFH, car, phone, and education deductions
- The difference between owing $317 and getting $1,887 back was 30 minutes of tracking
- Salary sacrificing $10k/year into super saves $2,700 in tax while building retirement wealth
Homework
Which of Sarah's deductions apply to your situation? What expenses are you currently not tracking?
Start a simple spreadsheet with three columns: Date, Expense Type, Amount. Add one work expense you paid this month.
What's Next?
20 minutes