Salary Sacrifice…is it worth the sacrifice?
First of all, what does salary sacrifice even mean?
Salary sacrifice is an arrangement you make with your employer. For example, many people may choose to divert some of their before tax income to their superannuation.
That way you get the double benefit of reducing your taxable income and increasing your retirement savings.
Tell me more about how it helps minimise my tax
If you have chosen to salary sacrifice, your income tax will be based on your reduced income which means that you will pay less tax.
As we start thinking about the end of financial year, salary sacrifice may be a great way to minimise your tax, although the later you leave it, you may not be able to maximize your position and meet your cash flow requirements.
Topping up your superannuation fund during the year through sacrificing some of your salary means two things: you will accumulate more super and you may pay less income tax.
Because your employer has been paying part of your income into your super, your taxable annual income is reduced so there is less personal income tax to pay and you could even find yourself in a lower tax bracket.
Within your superannuation fund however, your salary sacrificed amount will be taxed at a maximum of 15%, which may be lower than your marginal tax rate. This is a very good option if you are moving towards retirement.
If you’re interested, get in touch with your Financial Planner today and at that first meeting, don’t forget to bring along any supporting documentation such as your recent tax history, your income, any super payments as well as detail regarding your existing super and so on.
To make an appointment to see one of our Financial Planners call us on 13 25 85 or book an appointment online.
This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with the assistance of a Financial Planner, whether the information is appropriate in light of your particular circumstances and needs.
Financial planning services are provided by Eastwoods Wealth Management Pty Ltd ABN 17 008 167 002 / AFSL 237853 trading as Beyond Bank Australia Wealth Management. Eastwoods Wealth Management Pty Ltd is a subsidiary of Community CPS Australia Ltd ABN 15 087 651 143 / AFSL 237 856 trading as Beyond Bank Australia.
Any general tax information provided is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.