Salary sacrifice

Salary sacrifice is a great way to grow your super and pay less tax.

What is salary sacrifice?

Salary sacrifice is when you arrange with your employer to pay part of your gross pay directly into your super account, before it is taxed. This can help grow your super for a more comfortable retirement whilst reducing your personal income tax.

Advantages of salary sacrifice

Salary sacrificed superannuation contributions are taxed at 15% upon entry into a super fund, a much lower rate than most people's marginal rates payable on income tax.

How to start salary sacrificing

Simply complete a Request for Payroll Deduction Form and hand it directly to your payroll department. This form is available in our Salary Sacrifice brochure, which you can download now (see Related content at left).

Your employer will notify LUCRF Super of the contribution type and amount when making your superannuation payments.

Things to consider before you salary sacrifice:

• Salary sacrifice arrangements are not available to everyone and not all employers will offer the option. If you are paid under an Award, you may not be able to sacrifice your salary to a level below what is stipulated in your Award.
• Because the tax treatment of salary sacrifice contributions is different to that of personal super contributions (made from your after-tax pay), it may not suit your circumstances. Call a LUCRF Super Representative on 1300 130 780 to discuss your situation, we can provide you with personalised financial advice if necessary.
• When making a decision, ask your employer which gross pay figure they will be using to calculate your 9% SG contributions – will it be before or after your salary sacrifice has been deducted? Example: If you gross $50,000 p.a. and you salary sacrifice $5,000 p.a., your employer may pay your SG contribution on $45,000 instead of the $50,000 you are earning. Ask your employer for clarification.
• If you are aged between 65 and 75, you will need to meet the work test (which requires that you work a minimum of 40 hours in a continuous 30-day period during the financial year) to make either personal or salary sacrifice contributions to your super. If you are aged 75 or over, you are not eligible to contribute.

For more information, please see our Salary Sacrifice brochure in Related content at left.