Salary sacrificing is a pre-tax contribution from your income to your super account, so you’ll have more in your retirement fund. The amount you choose comes out before you are paid, reducing your taxable income and giving an immediate tax benefit.
This approach makes the process of boosting your retirement savings as easy as possible.
You can also salary sacrifice for other items such as computer or a car.
How to salary sacrifice
Set up a salary sacrifice arrangement with your employer to regularly redirect a certain amount of your income to your super account. Considering your expenses, it’s a matter of how much you’re willing to give up now.
If your income and before-tax super contribution is:
- under $250,000 p.a., pay a 15% tax on your salary sacrifice contributions
- more than $250,000 p.a., pay 30% tax on your salary sacrifice contributions.
Note: Not all employers offer salary sacrifice arrangements.
Benefits of salary sacrifice
Here are the benefits when you’re under salary sacrifice arrangement:
- salary sacrificing to super reduces your taxable income — the amount you’ve chosen to salary sacrifice to super is taxed at a concessional rate (before-tax).
- superannuation is one of the most tax effective ways to invest.
- earnings on your super investments are taxed at a low rate as well.
What is Salary Sacrifice? Click To TweetNote: If you are on lower income (below $37,000), a Government super co-contribution can help to boost your super.
How much can I salary sacrifice?
$25,000 p.a. is the annual cap for before-tax super contributions in 2018/19. Included in this is your employer’s regular super contributions (9.5%) — any salary sacrifice and personal contributions where you intend to claim a tax deduction.
Employer’s regular super contribution
Salary sacrifice agreement with your employer is an addition to the compulsory superannuation guarantee. Your employer should not include any part of your salary sacrifice into their mandatory super contributions.
Small loans in Australia
Do you need cash to make ends meet?
If you are under salary sacrifice arrangement, your income may not suffice for now.
In this case, Quickle‘s small loans are just what you might need.
Fill out the small loans application online. Quickle provides decision as quickly as possible. Once the loan is confirmed, you then set the monthly repayment date of your choice.
Your funds arrive just as quickly, and possibly on the same day.
