Description
Most employees believe that salary sacrificing is confined to making contributions to super but there are opportunities to use it in other ways to reduce tax. This is an introduction to a complex topic that recommends professional advice.
Introduction
When most people think of salary sacrifice they think of superannuation. It’s pretty easy to see why. If someone earning $100,000 a year takes the last $10,000 of that amount as cash salary, they will pay $3,900 in tax and the Medicare levy. Salary sacrifice that same amount as a concessional contribution to super and only $1,500 will be lost to tax.
The reduction in the annual concessional contribution cap to $25,000 limits the amount that can be salary sacrificed to super, so it’s worth remembering that there are other expenses that can be paid with pre-tax income under a salary packaging arrangement. This is subject to your employer’s agreement, of course.
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