Salary sacrificing

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Salary sacrifice: is it for you?

Salary sacrificing means regular amounts are deducted from your salary before you pay tax on it. It's also known as 'salary packaging'.

While salary sacrifice has been traditionally used for benefits like cars, car parking and health insurance, more and more people are using it as a tax effective way to make extra contributions to their superannuation.

Your employer can contribute more to your super than the legislated amount required by the government using a salary sacrifice arrangement.

These super contributions are also tax deductible for your employer. But there are limits to the amount that can be contributed each year, and not all employers offer salary sacrificing.

The benefits of salary sacrificing:

  • Contributions aren't taxed as income before they hit your super fund.
  • Contributions are taxed at 15% in the fund, which is lower than most personal tax rates. That means you'll have more dollars working for your retirement savings.
  • Contributions made through a salary sacrifice arrangement to a complying super fund are Fringe Benefit Tax (FBT) exempt.

If you're eligible for salary sacrificing, our financial advisers can help you structure a package that suits your financial situation.