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Salary sacrificing into your super

Salary sacrificing part of your income into your superannuation brings about a lot of financial benefits. Employers in Australia are required to contribute the equivalent of 9.5% of an employee’s salary into a nominated superannuation fund. On top of these contributions, employees can request that their employer reduce their salary and direct the additional cash into their superannuation.

There are a number of benefit to salary sacrificing into your superannuation:

1. Reduce your tax liability: Superannuation contributions are taxed at the low rate of 15% (or 30% for individuals earning over $300 000). Therefore, by making additional contributions from your before-tax income, you are likely to decrease your overall tax liability.

2. It won’t cost your employer anything: Your employer will not have to pay any fringe benefits tax on your additional superannuation contributions, so it shouldn’t be an issue for you to make an arrangement.

3. Compound interest! The more that you contribute to your superannuation early in life, the harder your money will work for you. Even a very small additional contribution each week when you’re young can make a big difference to the final size of your nest egg.

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News

SMSFs: beware of illegal early super release

July 13, 2018

The Australian Tax Office (ATO) is reminding self-managed super fund (SMSF) trustees to beware of allowing members to access their super early.

A self-managed super fund (SMSF) trustee must meet a condition of release before any funds can legally be released.

The ATO can issue severe penalties if you or a SMSF member access your super before you are legally entitled to do so.

Some consequences of getting caught up in an illegal super scheme include the disqualification of trustees, imposition of administrative penalties, the fund being made non-complying and prosecution.

The Tax Office encourages those members who have been involved in an illegal super scheme to contact them immediately. The ATO will review your voluntary disclosure and take your circumstances into account when determining any penalties.