Salary Sacrificing Super – What You Need to Know

If you choose to make voluntary contributions to your superannuation fund, you can really help to boost your retirement fund. By salary sacrificing (or salary packaging as it’s also commonly called) you may be able to reduce the amount of tax you pay.

What is Superannuation and the Requirements?

Superannuation refers to the arrangement which people in Australia make to have funds available for them in retirement. Superannuation arrangements are government supported and encouraged with minimum provisions being compulsory for employers to contribute for their employees.

Currently, employers are required to pay 9.5% of an employee’s salary or wages into a superannuation fund. This minimum is set to increase to 12% by 2020.

Voluntary Super Contributions

Individuals can choose to make additional voluntary contributions towards their superannuation up to the “annual superannuation concessional contributions cap” before being required to pay the superannuation excess concessional contributions tax (this tax is at marginal rates when you do your tax return).

Salary Sacrifice Super Contributions & Limits

Salary packaging into your superannuation might be a good idea, depending on your income, debt and the amount of time you have before you retire.

Current legislation (2017-18) allows you package up to $25,000 per annum into your super fund from pre-tax dollars including employer payments into super investment and insurance as well as any self-managed super fund.

Additional superannuation contributions over those made under the super guarantee law are reportable employer superannuation contributions and may affect your Family Tax Benefit.

Whilst you may not be subject to income tax on these contributions, up to the maximum allowable level, these contributions are included as income for government reporting purposes and may affect your Medicare levy surcharge (if you don’t have full private health cover), all dependent tax offsets, mature age worker tax offset, super co-contributions and HECS.

Salary Sacrifice Super Calculator

If you’re seriously considering to salary sacrifice your superannuation we would recommend utilising our Salary Sacrifice Calculator which will quickly tell you what your tax savings will be as well as the effects on your take-home pay.

For more information on salary sacrificing your super or any benefits from novated leases to remote area benefits, childcare and more, contact our friendly team today.