Salary sacrifice

Salary sacrifice is an arrangement between you and your employer, where you can transfer part of your before-tax salary into your super to potentially gain tax benefits.

How it works

Salary sacrificing lets you put some of your pre-tax salary into your superannuation at a maximum concessional tax rate of 15%, rather than your marginal tax rate.

Your assessable income is reduced by the amount of the contribution and as a consequence you may also drop to a lower marginal tax rate. Please refer to the ATO website for details of current year marginal tax rates. 

Contribution limits

Beware; the Australian Government has set limits on the amount of contributions that can be made each year without having to pay additional tax. The before-tax (concessional) contributions cap for 2017/2018 for all ages is $25,000. For 2016/2017 the cap was dependent on your age and was either $30,000 (less than age 49 at 30 June 2016) or $35,000 (aged 49 or older at 30 June 2016).

Before tax contributions include:

  • Employer contributions, such as compulsory SG (Super Guarantee) 
  • Any additional contributions your employer makes
  • Other amounts paid by your employer from your pre-tax income to your super fund, such as administration fees and insurance premiums
  • Salary sacrifice payments 
  • Contributions that you intend to claim a tax deduction for. You must first ascertain if you are eligible to claim, and, if so, complete a notice of intent to claim a deduction in the approved ATO form. This form should be forwarded to WA Super at the address noted on the form. 
Find out more

Watch our educational module ‘Salary sacrificing into super’ to learn more.

You can also use ASIC’s superannuation calculator to see the difference salary sacrificing can make to your retirement savings.

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