What is ‘salary sacrifice into super’ and do I have to let my employees do it?
Superannuation offers considerable tax advantages as a form of saving if your marginal tax rate is above the superannuation contributions tax rate of 15%. If you are earning more than you need right now, or your earnings mean that you are in a higher tax bracket, you can gain a tax advantage by forgoing part of your pay (or sacrificing it) and instead putting that extra money into your super. However, you should remember that putting money into your super means it is locked away until you are at least 55 years of age and have retired. It can only be accessed earlier in limited circumstances. Before salary sacrifice $ After salary sacrificing $18,500 into super Salary 75,000 56,500 9% SG into super 6,750 6,750 Less tax 16,500 10,650 Less Medicare 1,125 847 Take-home pay 57,375 45,003 Less living expenses 45,000 45,000 Super contribution + other retirement savings 19,125 25,253 Less 15% contributions tax on super 1,012 3,787 Net retirement savings 18,113 21,466 $3,353 extra retirement sa
