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 you can you Salary Sacrifice
There are limitations on how much you can salary sacrifice and this is dependent on your age. If you are under the age of 49, the concessional contribution limit is $30,000 per annum which also includes the amount your employer contributions (i.e. the SGC). For those aged over 49, the concessional contribution limit is $35,000.
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.
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