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How does salary sacrifice work?

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Let’s look at the basics. First, you need an employer who’ll let you do it. You decide you want to put more money into your compulsory super that your boss contributes into on payday. This is nine per cent of your gross wage. If you’re under 50 years of age, you can put up to $50,000 into your super fund under what is called a concessional contribution.

Until 30 June 2012, a transitional concessional contributions cap will apply for people aged 50 or over. During this time, if you are aged 50 or over, the annual cap will be $100,000. The big plus is that income that might be taxed at the 40 per cent or 45 per cent tax rate would be only taxed at 15 per cent. That puts a lot more money into your super turbo-charging the final returns. Go to www.ato.gov.au and type in ‘super essentials’ for some great info.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Thursday, January 13, 2011

The Switzer Super Report is a newsletter and website for self managed super funds. With exclusive commentary from Peter Switzer, Roger Montgomery, Paul Rickard and Charlie Aitken the Switzer Super Report will help you maximise your after tax investment returns and grow your DIY Super. Click here for a free trial or subscribe today.

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