Is boosting your super through salary sacrifice right for you?
Salary sacrificing works by redirecting some of your gross salary directly into superannuation before tax, this is often done through your company’s payroll team.
What are the benefits of salary sacrificing to superannuation?
If your income is over $37,000, the main benefit could be a tax benefit.
These extra super contributions are taxed at 15 percent, lower than the marginal tax rate payable.
This means your sacrifice is not counted towards your assessable income or fringe benefit, for tax purposes.
It can seem like an easy way to complement your compulsory superannuation guarantee and boost your overall superannuation balance, which could mean you have a higher balance upon retirement.
Make sure you’ve reviewed your future financial goals as you may not be able to access an early release of these additional funds if you need it. There are many conditions for early release of super, the most common including reaching preservation age and retiring, ceasing employment after the age of 60, reaching age 65, or severe hardship.
Be mindful that the total amount of contributions includes what your employer pays on your behalf. Going over this limit could mean additional charges and/or a higher tax rate.
Each have their own limits and penalties for contributing more than these limits, so refer to the ATO website for more information.
Through this scheme, voluntary concessional and non-concessional contributions to their super are invested together with the overall super balance.
This could lead to a first home buyer increasing their deposit through investment, rather than saving money into a traditional savings account. The Australian Taxation Office (ATO) website provides more information about this scheme.
The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.
The information in this article has been prepared for general information purposes only and is not intended as legal advice or specific advice to any particular person. Any advice contained in the document is general advice, not intended as legal advice or professional advice and does not take into account any person’s particular circumstances. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives and needs.