Boost your Super and pay less tax!
Superannuation is recognised as a tax effective investment strategy and is designed to provide income for an employee’s retirement. A great way to boost your investments and ultimately increase your income in retirement is to salary sacrifice superannuation contributions.
When you salary sacrifice super contributions into a complying super fund, the sacrificed amount is not considered a fringe benefit for tax purposes. As a result, your employer will not be liable for any fringe benefits tax (FBT) and will not be required to include the super contributions as a reportable fringe benefit amount on your payment summary.
Is it right for you?
As a general rule, the higher your taxable income, the greater the tax benefit of salary sacrificing super will be. Based on current marginal tax rates, employees earning less then $37,000 per annum may not gain any tax advantage by salary sacrificing super and should consider the Government’s co-contribution scheme as an alternative.
How much can you save?
Case Study – Jane Brock earns $75,000 and wishes to salary sacrifice $15,000 per annum towards extra superannuation contributions:
| Super Contributions | Without | With |
|---|---|---|
| Employer Super Guarantee contribution | $6,750 | $6,750 |
| Salary Sacrifice | $0 | $15,000 |
| Total Super contribution | $6,750 | $21,750 |
| Less Government Contribution Tax | $1,013 | $3,263 |
| Total Net Contribution to Super | $5,738 | $18,488 |
| Income & Tax | ||
| Taxable Income | $75,000 | $60,000 |
| Less Tax Payable | $17,047 | $11,847 |
| Net Income (Take-Home Pay) | $57,953 | $48,153 |
| Net Position (Take-Home Pay + Total Super Contribution) | $63,691 | $66,641 |
| Annual Benefit | $2,950 |
Getting Started
Once you’ve decided to salary sacrifice towards super, the first thing you’ll need to decide is how much you’d like to set aside in each pay. Simplygreen Salary Packaging can then help you establish your salary sacrifice arrangement with your payroll and arrange for the funds to be directly paid into your nominated super fund.
Contact us on 1300 664 323 to establish your salary sacrifice arrangement today!