What is salary sacrifice?
Salary sacrifice is an arrangement between you and your employer, where you choose to give up or ‘sacrifice’ part of your before-tax salary and put it straight into your superannuation. By doing so, you’ll reduce your gross taxable salary, which means you pay less income tax (provided you are currently earning above the tax-free threshold). Money going into your superannuation is taxed at 15%.
How much can I salary sacrifice?
The concessional contribution limit is currently $30,000 per year for members under the age of 50. For members 50 and over the cap is $35,000.
Concessional contributions include salary sacrificed amounts and any contributions from your employer (including the 9.5% compulsory contributions).
Excess concessional contributions will be taxed at an individual’s marginal tax rate, plus an interest charge and Medicare levy.
How do I arrange salary sacrifice?
Salary sacrifice is available at your employer’s discretion, so check with your employer to see if it’s available to you.