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Salary sacrificing your super

Contributing extra to your superannuation is a good way to boost your retirement funds.

One of the ways you can add more to your super is through salary sacrificing. Salary sacrifice is an arrangement with your employer to forego part of your salary or wages in return for your employer providing benefits of a similar value.

Salary sacrificing your super means your employer will redirect some of your salary or wages into your super fund instead of to you.

These salary sacrifice contributions are taxed at a maximum rate of 15 per cent, which is generally less than your marginal tax rate. The sacrificed amount will not be considered a fringe benefit if the super contributions are made to a complying super fund.

There is no limit to the amount you can salary sacrifice (provided there are no limitations in your terms of employment); however, you must be wary of the concessional (before-tax) contribution cap. If you go over the cap, you may have to pay additional tax.

Keep in mind, the salary sacrificed amounts count towards your concessional contributions cap, in addition to your employer’s contributions (i.e. compulsory employer contributions).

Generally, excess contributions will be included as taxable income, taxed at your marginal tax rate plus an excess contributions charge. Note, that your age may affect the concessional contributions cap, how the cap applies and what options you may have.

Individuals should also consider whether the amount sacrificed will attract Division 293 tax. This tax applies when you have an income and concessional super contributions of more than $300,000, or over $250,000 from 1 July 2017. Division 293 tax levies 15 per cent tax on taxable contributions above this threshold.

If you do choose to salary sacrifice into super, remember contributions don’t count when the payment is sent, only when it is received by your fund. Make sure your fund receives all your contributions by 30 June.

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What Are The Consequences Of Improperly Lodged Tax Returns?

May 4, 2021

With tax return season approaching quickly this year, you may have already started looking into lodging your income tax return. Ensuring that your details are correct and that any information about your earned income from the year is lodged is the responsibility of the taxpayer and their tax agent. However, if during this income tax return process the tax obligations of the taxpayer fail to be complied with, the Australian Taxation Office has severe penalties that they can enforce.

Australian taxation laws authorise the ATO with the ability to impose administrative penalties for failing to comply with the tax obligations that taxpayers inherently possess.

As an example, taxpayers may be liable to penalties for making false or misleading statements, failing to lodge tax returns or taking a tax position that is not reasonably arguable. False or misleading statements have different consequences if the statement given results in a shortfall amount or not. In both cases, the penalty will not be imposed if the taxpayer took reasonable care in making the statement (though they may still be subject to another penalty provision) or the statement of the taxpayer is in accordance with the ATO’s advice, published statements or general administrative practices in relation to a tax law.

The penalty base rate for statements that resulted in a shortfall amount is calculated as a percentage of the tax shortfall, or in the case of no shortfall amount, as a multiple of a penalty unit. This percentage is determined by the behaviour that led to the shortfall amount or as a multiple of a penalty unit, which are as follows:

If a statement fails to be lodged at the appropriate time, you may be liable for a penalty of 75% of the tax-related liability if:

To ensure that the statements, returns and lodgements are done correctly, and avoid the risk of potential penalties, contact us today. We’re here to help.