• Salary sacrifice

  • Find out how Anne is able to save on tax and grow her superannuation by salary sacrifice. Salary sacrifice example

    Grow your super by salary sacrifice

    Salary sacrifice contributions are made from your before-tax (pre-tax) income, which reduces your income level and therefore the amount of income tax that you would normally have to pay. By electing to put some of your before-tax salary into your superannuation account, you could:

    • grow your super and top up your savings
    • benefit from compounding investment returns
    • save on tax

    Salary sacrifice and potentially save on tax

    Salary sacrifice is a type of concessional (before-tax) contribution, which is made before income tax is calculated on your salary.

    Instead of being taxed at your marginal rate, salary sacrificed contributions will generally be taxed at 15% when they are paid into a super fund provided you don’t exceed the contributions cap limit. As a general rule, the higher your marginal tax rate, the more you can benefit from salary sacrificing.

    However, there may be little or no benefit in salary sacrificing if you are on a low income. The tax benefits will depend on how much you earn and how much you already contribute to your super.

    Need advice? 

    How much can I salary sacrifice?

    To prevent high income earners from using salary sacrificing as a way to avoid their marginal rate, there is a limit on the amount you can contribute each year. 

    Your age in 2016/17 Before-tax
    limit*
    Contributions
    tax paid
    Tax paid on contributions
    above the limit
    < 50 $30,000 pa  15%
    (30% if you earn
    $300,000 pa or more)
    At your marginal
    tax rate
    50 and over $35,000 pa 15%
    (30% if you earn
    $300,000 pa or more)
    At your marginal
    tax rate

    Example: how much can I salary sacrifice based on my income?

    Your age in 2016/2017 Salary Superannuation Guarantee 9.5% Amount left to sacrifice
    < 50 $80,000 $7,600 $30,000 - $7,600 = $22,400
    < 50 $90,000 $8,550 $30,000 - $8,550 = $21,450

    *Limit does not include the Government co-contribution.
    *Limit includes the 9.5% compulsory super contribution paid by your employer
     

    If you do make concessional contributions to super above the annual limit, the excess will be added to your assessable income and will be taxed at your marginal tax rate. You will receive an offset for the 15% contributions tax already paid.

    You will have the choice of withdrawing up to 85% of the excess contribution. As you will have already been taxed on this amount at your marginal tax rate, no further tax is payable on any withdrawal.

    Note that contributions above the before-tax limit will also count toward your after-tax (non-concessional) limit.

    Salary sacrifice calculator image

    Use our calculator to see how much you can salary sacrifice

    Superannuation is one of the most tax-effective ways to invest your savings. Salary sacrificing to super reduces your taxable income, and the earnings on your investments are taxed at a low rate too.

    Use our salary sacrifice calculator and enter your income details to see how much you can contribute and how much you could be saving!

     

     

    Employer Superannuation Guarantee (SG)

    Important: you should verify with your employer that your salary sacrifice agreement is in addition to the compulsory Superannuation Guarantee (SG), which is 9.5% of your salary.

  • Things to consider before you salary sacrifice

    Is it available for you?

    Salary sacrifice arrangements are not available to everyone and not all employers offer the option, so it's best to check with your employer to see if this is a possibility.

    Tax implications you should be aware of

    Salary sacrifice isn't necessarily right for all circumstances and we recommend that you seek professional advice before making a decision. Australian Catholic Superannuation offers two appointment-based advice services: over-the-phone and face-to-face

    Need advice? 

    Meet Anne: salary sacrifice example


  • How to start salary sacrificing

    After discussing with your employer to confirm that they can accommodate salary sacrifice, complete a salary sacrifice form and hand it directly to your payroll department. Your employer will notify Australian Catholic Superannuation of the contribution amount when making your superannuation payments.

  • Employer Bonus Contribution

    If you are work for a Catholic employer in Queensland, then you may be eligible for an employer bonus contribution!

    If you make additional contributions to your super, your Catholic employer can offer a generous contribution on top of the 9.5% they already give. However, the extra amount paid depends on your own contribution level.

    Your extra contributions Contributions from your employer Including bonus of: Total contributions into your account
    0% of salary 9.5% NIL 9.5%
    3% of salary 10.75% 1.25% 13.75%
    4% of salary 11.75% 2.25% 15.75%
    5% of salary 12.75% 3.25% 17.75%

    Enquire with your payroll office to confirm they offer this bonus incentive.