Salary sacrifice

Salary sacrifice is an arrangement made with your employer, where you agree to sacrifice part of your future salary or wage in exchange for some other benefit, such as increased super contributions.  Salary and wage earners can possibly save on tax by contributing to superannuation through a salary sacrifice arrangement.  Don’t make decisions lightly and always consider getting expert, licensed financial advice when making superannuation or retirement plans.

How will salary sacrifice contributions be taxed?

As the tax treatment of personal super contributions and employer-sponsored contributions is different, there may be a tax advantage by entering into a salary sacrifice agreement.  Salary sacrificed superannuation contributions are taxed at 15% upon entry into a super fund, a much lower rate than most marginal rates payable on income tax.  The personal income tax rates, which apply for the financial year 2008/09, are shown in Table One.

Table One - Personal income tax rates for the financial year 2008/09
Taxable income range	Tax rate
$0 to $6,000	Nil
$6,001 to $34,000	15c for each $1 over $6,000
$34,001 to $80,000	$4,200 plus 30c for each $1 over $34,000
$80,001 to $180,000	$18,000 plus 40c for each $1 over $80,000
Greater than $180,001	$58,000 plus 45c for each $1 over $180,000
Medicare levy of 1.5% should be added where applicable

How do I make salary sacrifice contributions to LUCRF Super? 

1. Salary sacrifice arrangements are only possible for some employment situations. Fund members need to determine whether their conditions of employment (as set out in their Award or Industrial Agreement, or elsewhere) make allowance for part of their salary or wages to be sacrificed in this way, and if so, what limits apply.

2. Arrange with your employer for salary sacrifice contributions to be deducted from your wage or salary before income tax is calculated.

3. Employers should notify LUCRF Super of the contribution amount for each member, which represents the salary sacrifice component.  In this way, LUCRF Super will be able to identify any salary sacrifice contributions received as a separate item on member statements.

Want to learn more?
            The Australian Taxation Office website contains a comprehensive guide on all aspects of salary sacrificing for employees and employers. You can access it at http://www.ato.gov.au/super/content.asp?doc=/content/38336.htm&mnu=6041&mfp=001/007

 

Disclaimer:This financial product advice is general in nature and has been prepared without taking into account your objectives, financial situation or needs.  You should therefore consider the appropriateness of the advice in light of your own objectives, financial situation or needs before acting on this advice.  It is recommended that you obtain, and consider the information in, the LUCRF Super Product Disclosure Statement (including Financial Services Guide) before making any decision.  Should you require advice that addresses your personal circumstances, it is recommended that you contact a person who is authorised to provide personal financial product advice.

 

• Forms

• Payroll Deduction/Salary Sacrifice

  If your employer allows salary sacrifice to LUCRF Super to be deducted from your pay please complete this form and hand it in to your payroll officer.

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• Brochures

• Salary Sacrifice Brochure

  Ths brochure provides details on making salary sacrifice (pre tax) contributions and has a deduction authority to hand to your employer

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