STRATEGY – Salary Sacrifice and How it Works


Salary Sacrifice and How it Works

Salary Sacrifice
and How it Works

While there is a sacrifice or reduction in take home salary, the important part of salary sacrifice is the saving for retirement and the added bonus of a lower-taxed environment. The tax is 15%, where-as tax on income over $18,201 is now taxed at 19% and higher as your total income for the year increases, up to 45% plus the Medicare levy.

Watch the concessional-contribution caps, which are ones where they are claimed as a tax deduction (eg an employer) as concessional contributions include salary sacrifice. The current cap 2012-2013 is $25,000, or $50,000 for people over 55. See ATO site.

Let’s illustrate the calculations

Taxable       Marginal      Salary           Marginal        Tax (@15%)     Net Tax
Income        Tax Rate       Sacrifice       Tax                    if  in Super
$15,000          0%                   $5000              $0                         $750                     $750 paid
$20,000         19%                 $5000              $950                     $750                     $200 saved
$85,000         37%                 $5000              $1850                   $750                     $1100 saved

If your taxable income is less than $18,000 then non-concessional (personal, after tax) contributions and the Government Co-Contribution as better than salary sacrifice. Sometimes a combined salary sacrifice and personal contribution may have advantages.

Calculators for Salary Sacrifice and Govt Co-Contribution can be found on the Vic Super website HERE, or the ATO, as well as other sites.



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Self-Managed Superannuation Service Providers in Australia. SuperBenefit provides a wholistic SMSF assistance, education and administration service continuum - 1. “assistance” is help of whatsoever nature where our overall SMSF experience and knowledge enables us to provide assistance/help without any legal (or “license”) limitations. 2. “education” involves providing knowledge through teaching, coaching and mentoring about all matters SMSF, including (but not limited to) investment issues such as equities and property, 3. “administration” encompasses all admin aspects of legally required SMSF trustee and member record keeping including (but not limited to) audit and ATO matters. In keeping with our key point that SuperBenefit does not provide Financial Advice, where issues arise from 1, 2, and/or 3 above Indicate a need for a legally authorized provider (such as a Financial Adviser) and the client does not have their own service provider, the client can utilize SuperBenefit’s ‘Connect Assist’ … SuperBenefit, in itself, does not provide Financial Advice, but it does provide the wherewithal for great SMSF service. WE do not provide Financial Advice or any other service that requires a legally authorized provider. However, where such advice or service is required we have our ‘Connect Assist’, a SuperBenefit resource we use to connect clients to a Licensed Advisor or other legally authorised service provider. Call us 0407 361 596, no obligation FREE Connection call to see how we can help you!
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