How salary sacrifice could help you save on tax
Putting a little extra into your super each pay before you’re taxed – known as salary sacrifice – could mean more for you now as well as in the future.
Your contributions will generally be taxed at 15%, which may be less than your marginal rate of up to 47%.1
Your choice of amount
The amount you add is up to you, and is counted toward the before-tax (concessional) contributions cap of $25,000 per year.2
The compound effect
Any returns on your super will be compounded over the years, which may boost your super balance. Plus, any earnings within super will be taxed at a maximum of 15%.
Setting up salary sacrifice is easy
We're here to help
It’s important to note your super will be preserved until you retire or meet a condition of release. To consider whether salary sacrifice is right for you, speak to your financial adviser.
- Contact your financial adviser.
- Speak to your employer
- Call us on 13 13 36
1. The highest marginal tax rate is 45% plus 2% Medicare levy. Concessional contributions such as salary sacrifice are generally taxed at just 15% when received by your fund. However, a higher rate of tax may be payable on part or all of these contributions if your income and before-tax contributions are more than $250,000 in a financial year.
2. Before-tax (concessional) contributions are limited to a general cap of $25,000 in a financial year, with additional tax applying for contributions in excess of this cap. Concessional contributions include employer super guarantee payments, salary sacrifice contributions and any personal contributions for which you claim a tax deduction. Unused concessional cap carry forward: If you haven't reached your concessional contributions cap during a financial year, you may be able to carry forward unused concessional cap amounts to use in future years. Access to unused concessional cap amounts applies from 1 July 2019 and is limited to people with a total superannuation balance less than $500,000 and to unused amounts from the previous five financial years (starting from 1 July 2018).
Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (Colonial First State) is the issuer of FirstChoice Personal Super, FirstChoice Wholesale Personal Super, FirstChoice Pension, FirstChoice Wholesale Pension, FirstChoice Employer Super offered from the Colonial First State FirstChoice Superannuation Trust ABN 26 458 298 557. This document may include general advice but does not take into account your individual objectives, financial situation or needs. You should read the relevant Product Disclosure Statement (PDS) and Financial Services Guide (FSG) carefully, assess whether the information is appropriate for you, and consider talking to a financial adviser before making an investment decision. The PDS and FSG can be obtained from colonialfirststate.com.au or by calling us on 13 13 36.
Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. Colonial First State is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.