Salary plus super versus a total package

The same headline number, two different offers

Australian job ads quote pay on two incompatible bases and rarely explain which one they are using. One employer means a base salary, on top of which it will pay the 12% superannuation guarantee. The other means the total it will spend, with that 12% already inside the figure. Both write “$120,000”, and the gap between them is larger than most annual pay rises.

This is not a rounding problem. Because the superannuation guarantee is calculated as a percentage of the base salary, the difference between the two readings is the full contribution — $14,400 a year on a $120,000 base. It shows up in your cash pay, in your super balance, and in what you should be asking for when you negotiate.

Multiply by 1.12 going up, divide by 1.12 coming back down

The arithmetic mirrors the GST problem, and it fails in the same place. Adding super to a base is easy; extracting it from a total is where the intuition goes wrong, because 12% of the total is not the same as 12% of the base it was calculated on.

Base salary → package:  package = base × 1.12
Package → base salary:  base    = package ÷ 1.12
Super inside a package: super   = package − (package ÷ 1.12)

On a $120,000 package the correct base is $107,142.86 and the super is $12,857.14, which add back exactly to $120,000. Subtracting 12% of the package instead gives a base of $105,600 and understates the salary by more than $1,500. If your split does not add back to the advertised total, you divided when you should have multiplied.

What the difference is worth in real money

Total value is the right basis for comparing offers, but it is not what lands in your account. The extra base salary is taxed; the extra super is not part of take-home pay at all. Splitting the gap into those two parts makes the choice concrete.

The plus-super offer pays about $8,743 more a year in the hand, or roughly $336 a fortnight, and puts an extra $1,543 into super as well. The take-home gap is smaller than the salary gap because the extra $12,857 is taxed at 32 cents in the dollar at this income — 30% income tax plus the 2% levy. The mechanics of that calculation are in how Australian take-home pay is actually calculated.

The language that tells you which one you are reading

Ads and contracts are reasonably consistent in their wording, even when they are vague about the arithmetic. These phrases are the reliable signals.

Super is on top

• “Plus superannuation”, “plus super”, “+ super” or “excluding super”.
• “$120,000 base salary” or “base plus statutory superannuation”.
• An hourly or weekly rate quoted from an award or enterprise agreement, since award rates are base rates.

Super is already inside the number

• “Package”, “total package”, “total remuneration package” or “TRP”.
• “Total fixed remuneration” (TFR) or “cost to company” (CTC), both common in larger organisations.
• “Inclusive of super”, “including superannuation”, or “$120,000 incl. super”.
• A number that looks oddly precise, such as $134,400 or $89,600 — a multiple of 1.12 is usually a package built from a round base salary.

When the ad says nothing at all, the default in most of the Australian market is that a quoted salary is a base and super is extra, but that is a convention rather than a rule. The document that settles it is the written offer, so read the remuneration clause before you sign rather than the advertisement.

Salary sacrifice and packaged benefits move the base again

Two further arrangements can make a package figure hard to read. Salary sacrifice is your choice: you agree to receive less cash salary in exchange for extra super or a benefit such as a novated car lease. Because the sacrificed amount is taken before income tax, your take-home pay falls by less than the full amount, and the contribution is taxed inside the fund at the concessional rate rather than at your marginal rate. It does not reduce what your employer must contribute as the superannuation guarantee.

Packaged benefits are the employer’s choice of how to describe the deal. A car allowance, a phone, a bonus target or a parking space may be quoted inside a total package even though they are not salary and, in some cases, do not attract super. That is why two $150,000 packages can contain quite different amounts of cash. Ask for the breakdown in dollars, and treat a bonus target as a target rather than as income.

What to ask before you accept

1. “Is the advertised figure base salary or a total package including superannuation?” Ask it in exactly those words, because “is super included?” invites a vague answer.
2. “What is the base salary in dollars?” Everything derived from your pay is calculated on that number.
3. “What is the employer superannuation contribution, and is it above the 12% minimum?” Some employers and most public-sector schemes contribute more.
4. “What else is inside the package?” Separate guaranteed cash from allowances, and both from a bonus that depends on performance.
5. “Is any part of the package a salary sacrifice arrangement I am agreeing to?” It should be your decision, not an assumption in the offer.

Get the answers in the written offer rather than in an email from a recruiter. If the offer and the advertisement disagree, the offer is what you are signing.

What the OzCalc package calculator does and does not model

The salary package calculator takes the number from the ad, asks whether it is plus-super or inclusive, and splits it into base salary, employer super and any extra cash benefits you enter. The super calculator does the same split from the super side and applies the maximum contribution base for high salaries.

Both treat the figure you enter as the earnings base for the superannuation guarantee and use the flat 12% rate. That is the right answer for an ordinary salary, and an approximation if a large share of your pay is overtime, commission or bonus, because those are not all part of the earnings base — the rules for that are in the superannuation guarantee, explained. Extra benefits you enter are treated as cash on top and do not themselves generate super. Neither calculator knows about employer contributions above the minimum, award-specific super terms, salary sacrifice, or fringe benefits tax on a packaged benefit, so a novated lease in particular needs its own numbers from the provider. For what the split leaves you each fortnight, use the salary calculator.

Common questions