THIS STRATEGY MAY BOOST YOUR SUPER SAVINGS AND SAVE YOU TAX!

Salary sacrifice and super

All our forms and publications are available at tasplan.com.au/forms-and-resources or call us on 1800 005 166 and we’ll send you a copy.

If you earn less than $54,837 in 2020-21 you may be eligible for a co-contribution on personal contributions you don’t claim a tax deduction for. Use the MoneySmart Super contributions optimiser at moneysmart.gov.au to work out what’s best for you, or speak with your accountant or tax adviser.

What’s salary sacrifice in super?Salary sacrifice is an arrangement between you and your employer to contribute money from your salary into your super before it’s taxed. This means you ‘sacrifice’ some of your before-tax salary to boost your retirement savings, and reduce your overall taxable income.

How does it work?Your employer pays salary sacrifice contributions straight into your super account before you pay tax on your earnings.

This may be tax-effective for some members, as not only do you grow your super, but you generally only pay 15% tax on these contributions instead of your usual income tax rate.

The table below shows that if you earn over $18,201 a year, you may benefit from salary sacrifice.

Income Tax rate1 if you receive this as salary

Tax rate if you salary sacrifice

Potential tax savings

$0 - $18,200 0% 15% Nil

$18,201 - $37,000 19% 15% 4%

$37,001 - $90,000 32.5% 15% 17.5%

$90,001 - $180,000 37% 15% 22%

Above $180,000 45% 15%2 30%1Tax rates for 2020–21 exclude the Medicare levy and personal tax offsets that may apply.

2If your combined income and before-tax contributions exceed $250,000 a year, you’ll pay an extra 15% on either your contributions, or the amount that is over the threshold - whichever amount is lower.

Boost your super for a small take-home pay cut. For someone who earns between $37,001 and $90,000 a year:

You ask your employer to salary sacrifice this much each fortnight

This reduces your fortnightly take-home pay3 by

Your Tasplan Super account receives

Each year your super account grows by

$10 $6.55 $8.50 $221

$20 $13.10 $17.00 $442

$30 $19.65 $25.50 $663

$40 $26.20 $34.00 $884

$50 $32.75 $42.50 $1,105

$60 $39.30 $51.00 $1,326

$70 $45.85 $59.50 $1,547

$80 $52.40 $68.00 $1,768

$90 $58.95 $76.50 $1,989

$100 $65.50 $85.00 $2,210

3Calculated using tax rates for 2020-21, including the Medicare levy. Excludes the low income tax offset and low and middle income tax offset.

1

Contribution limitsThere are caps on how much you can contribute to super, and you’ll need to satisfy the work test if you’re aged 67 or older. There will be tax consequences if the caps are exceeded. Refer to the Super contributions fact sheet or call us on 1800 005 166 for more information.

Before-tax contributions

Contribution type Before-tax (concessional) contributions

Examples • employer super guarantee (SG) contributions

• salary sacrifice • personal contributions you’ve

claimed a tax deduction for.

Cap 2020-21 $25,000 each year, regardless of your age4.

4Amounts over the cap will be taxed at your marginal tax rate plus interest, less a 15% tax offset.

How to start salary sacrificing to superYou’ll need to arrange this with your employer.

Not all employers offer salary sacrifice, so you should check that your employer offers this.

It’s best to have your salary sacrifice arrangement documented in a written agreement with your employer.

If you can’t salary sacrifice to super but want to make before-tax contributions, you might want to consider making a personal contribution and claiming a tax deduction for some or all of this amount. This has the same tax outcome as salary sacrifice. For more information, refer to our Claiming tax deductions for contributions fact sheet, contact the ATO on 13 10 20 or visit ato.gov.au.

Meet Jane.

Jane earns $50,000 each year.

She decides to salary sacrifice $100 each fortnight into her super account to boost her retirement savings and save on tax.

$50,000salary

$100salary sacrifice each fortnight

Result: Jane will benefit from income tax savings of $891 in income tax and extra net super contributions of $2,210 each year.

$85.00Super

each fortnight

Take-home pay

each fortnight

$65.50

3

Aaron earns $90,000 each year and salary sacrifices $250 each fortnight to his super account.

$90,000salary

$250salary sacrifice each fortnight

Impact on income taxNo salary sacrifice Salary sacrifice

Annual income $90,000 $90,000

Salary sacrificed super contributions - ($6,500)

Taxable income $90,000 $83,500

Total tax7 ($21,517) ($19,275)

Take-home pay $68,483 $64,225

Impact on super balanceNo salary sacrifice Salary sacrifice

Salary sacrificed super contributions - $6,500

Employer super guarantee contributions

$8,550 $8,550

Contributions tax ($1,283) ($2,257)

Increase to super balance $7,267 $12,7937 Includes the Medicare levy, low and middle income tax offset and low income tax offset.

Meet Aaron.

Tax saving

$2,242

Boost to super

$5,526

AND

Result: By reducing his take-home pay by about $164 each fortnight, Aaron could reduce his annual income tax bill by $2,242 and save an extra $5,526 in his super in a year.

More information For more information, email us at info@tasplan.com.au or call us on 1800 005 166. If phoning from overseas, call us on +61 3 6270 4800.

Should you salary sacrifice or make personal contributions?Salary sacrifice isn’t right for everyone. You may benefit more from making personal contributions.

You may qualify for a government co-contribution if you: • earn less than $54,837 in 2020-21 and • make personal (after-tax) contributions into your super account.

Other conditions apply. For more information, refer to our Boosting your super with government help fact sheet or call us on 1800 005 166.

Need advice?Making super contributions may be a good idea, depending on your circumstances.

We can provide you with general advice about your account. If you need personal advice, you can meet with one of our financial planners. Our planners have set fees for advice. Our financial planners are authorised representatives of Quadrant First Pty Ltd (ABN 78 102 167 877, AFS Licence No. 284443), a wholly owned subsidiary of Tasplan Pty Ltd operating as a separate legal entity.

1 July 2020 This fact sheet contains information or advice that’s intended to be general in nature and which was prepared without taking into account your personal objectives, financial situation or needs. Because of that, before acting on any information or advice in this fact sheet, please consider whether it’s appropriate to your personal circumstances, talk to a financial planner and consider our guides, available at tasplan.com.au/pds or by calling 1800 005 166, before making a decision about whether to acquire the products. The trustee of Tasplan Super (ABN 14 602 032 302) is Tasplan Pty Ltd (ABN 13 009 563 062). AFSL 235391. © 2020 Tasplan Pty Ltd. All rights reserved. 5

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Salary sacrifice and superFS-M

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