What is salary sacrifice?
Salary sacrifice contributions to super are before-tax (or “concessional”) superannuation contributions.
With your employer, you may be able to arrange to "sacrifice" part of your normal salary (before tax) to be paid directly into your super. Not only is this a convenient way of setting up regular additional payments into your super, but you can also save on tax.
Savings and tax benefits of salary sacrifice
There are considerable savings and tax benefits of salary sacrifice:
- If you salary sacrifice, you will reduce your normal income. This may also reduce the amount of income tax you pay.
- You increase your super savings, giving you more money in retirement
How to set up salary sacrifice
- Check with your employer if you can salary sacrifice
- Calculate how much and how often you would like to make contributions
- Get financial advice to make sure salary sacrifice is right for you
- Complete a salary sacrifice agreement form and pass onto your employer to complete.