When you choose to contribute part of your before-tax salary to go to your super account, they will be generally taxed at a maximum rate of 15%, which is generally less than your marginal tax rate, which can be as high as 45% (not including Medicare levy). So, putting some of your income into super via salary sacrifice, your taxable income is lowered, and so could your tax bill.
Boost your super the champions way
Salary sacrifice can be one of the most tax-effective ways to add to your super.
Everyone’s situation is different, and we can’t tell you whether you should add to your balance as we haven't considered your financial situation. So, before making additional contributions, you should consider your own personal circumstances and if this is the right thing for you.
Super investments can grow faster in a tax-effective environment, so each additional contribution may make a big difference in the long run thanks to the power of compound returns.
The following case studies show the long-term benefits of boosting your super due to compounding returns.
Will Salary Sacrifice work for me?
Salary sacrifice contributions receive specific tax treatment, and as a result, this type of contribution tends to be better suited to those who earn at least $23,226 a year with a marginal tax rate of 19% or more.
Those earning less than that amount might benefit more from making after-tax personal contributions in order to take advantage of the government co-contribution. It's probably best to seek financial advice on which type of contribution will suit you.
For higher income earners, it may be worth having a chat to a financial planner as salary sacrificing may take you over the before-tax contribution cap depending on your income. Do you earn over $250,000 per year? If you do, your before-tax contributions will generally be taxed at 30%.