One of the key strategies in boosting your super assets is salary sacrificing. Salary sacrificing allows you to ‘sacrifice’ part of your salary to contribute into your superannuation which is a great way to reduce your overall tax position and build your super assets.
How much can you Salary Sacrifice
There are limitations on how much you can salary sacrifice. From 1st July 2017, the concessional contribution limited is $25,000 regardless of age.
Benefits of Salary Sacrificing
Salary Sacrificing has the following benefits:
- The amount you salary sacrifice has a concessional tax of 15% versus your marginal tax rate.
- Boosts your super assets and retirement nest egg.
- Placing funds into a tax effective environment; as earnings on super is 15% and when you convert to a pension, earnings are taxed at 0%.
As an example, a client who is currently has an annual income of $130,000 decides to Salary Sacrifice $20,000 per annum into his superannuation. By implementing this strategy, the salary sacrificed amount of $20,000 is now taxed at 15% ($3,000) versus the clients marginal tax rate of 37% ($7,400). This is an annual tax saving of $4,400 per year and an additional $17,000 being added per year into superannuation.
If you would like advice on salary sacrificing and superannuation please do not hesitate to complete our online enquiry form below or simply contact our office to arrange an appointment.