Salary sacrificing

Salary sacrifice is one of the most tax-effective ways of contributing to your superannuation. It enables you to forgo salary which your employer then contributes to your super in addition to the 9%¹ super guarantee contributions they already pay.

What are the benefits?

Because you only pay income tax on your take-home pay, salary sacrificed amounts are not taxable in your hands.  Like other employer super contributions, salary sacrificed contributions are taxed at the super fund rate – 15%¹. If you’re in a high tax bracket, this is an opportunity to achieve significant savings and truly maximise each of your pay cheques. Also, sacrificing a portion of your pre-tax salary into superannuation could enable you to lower your tax bracket and, thus, reduce the overall amount of tax you pay.

If you are already in a lower tax bracket, your situation may be different, so it’s wise to speak with a financial adviser before entering into salary sacrifice arrangements.

What do I need to check before I start?

First, be sure that your employer will allow you to salary sacrifice, and that by adopting a salary sacrifice strategy, your employer won’t reduce the amount of super guarantee contributions they pay on your behalf.

You should also ensure that salary sacrifice plus superannuation guarantee contributions you make won’t exceed the annual cap on concessional contributions.

If you’d like advice on organising a salary sacrifice, or want to know more about maximising your retirement savings, you can use our online booking form to organise an initial, no-obligation consultation with a Commonwealth Financial Planner and start planning for a better life today.

 

• Important information
  1. Current as at 1/01/2011.
  
  This information is of a factual nature only and is not intended to constitute financial product advice. It has been prepared by Commonwealth Financial Planning Limited without considering your individual objectives, financial situation or needs. You should consider its appropriateness in light of your circumstances and consider seeking professional advice relevant to your individual needs before making a decision based on this information. Commonwealth Bank customers who wish to obtain information about retirement planning may do so by contacting a Commonwealth Financial Planner. Commonwealth Financial Planners are Representatives or Authorised Representatives of Commonwealth Financial Planning Limited ABN 65 003 900 169, AFSL 231139, a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.