Want to supercharge your super? Salary sacrifice is an easy and methodical way to build up your funds. It can also come with some tax advantages as we'll show you in this story.
Give me the main points
- Salary sacrifice lets you put some of your pre-tax salary into your super account.
- This may lower your taxable income.
- Another tax advantage: you get a capped tax rate of 15% on the 'sacrificed' income.¹
- It's straightforward - super easy - to set up with your employer.
Imagine a way to put extra money into your super before your salary hits your bank account, before you spend it on something you maybe didn’t need: a way to bring your taxable income down, so you pay less tax and can save a chunk of money in the process. It’s called salary sacrifice, and if you haven’t explored the benefits of the scheme, here’s a quick overview of how it works.
Small sacrifices can end up in big savings.
Salary sacrifice lets you put extra money into your super fund account before tax. This can lower your taxable income, so you pay less tax and can save more for retirement.
Let's say you have an income of $60,000 and you chose to salary sacrifice $10,000 over the course of the year. Your taxable income would drop to $50,000. This means you’d pay around $8,547 in tax instead of $12,147.² Salary sacrifice isn't for everyone though, and is more effective if you earn more than $37,000.³