With salary sacrifice you can contribute more to your retirement savings. You can ask your employer to set your salary sacrifice up for you. Your employer re-directs some of your take home pay into your super account.[S1] Salary sacrifice is a way to grow your super savings and at the same time, potentially reduce your taxable income.[S2]
You choose an extra amount you’d like your employer to pay into your super. It can be a percentage or a set dollar amount of your before-tax pay. The benefits of salary sacrifice include:
Before you get started, check out the limits on how much you can contribute to your super fund each financial year.
Did you know?
Salary sacrifice contributions are taxed at 15%, compared to the tax on your take-home pay which can be up to 45%. [S1]
Learn more about how salary sacrificing can boost your super.
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There are a few different types of contributions that can help grow your super for retirement:
^Eligibility criteria applies
The downsizer contribution helps Australians over 55 boost their super when they sell their home.
If you sell your primary residence, you may be able to contribute up to $300,000 for singles and $600,000 for couples into your super. Downsizer contributions do not count towards your after-tax contribution cap and there may be tax advantages – it can be a great way to get some extra money saved for retirement.
It’s all part of the government’s plan to help older Australians while freeing up larger homes for young families. However, you don’t have to literally downsize and buy a smaller home to qualify. You do need to be 55 or over and have owned your home for at least 10 years.ÌýAnd there are some otherÌýrules that apply.
Find out more about downsizer contributions.
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Worried you won't have enough super to fund your retirement? The are always options.
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Salary sacrificeÌýis when you choose an extra amount you’d like your employer to pay into your super. It can be a percentage or a set dollar amount of your before-tax pay. This is in addition to the compulsory Superannuation Guarantee (SG) that your employer must pay directly into your super.
This allows you to grow your super savings and reduce your taxable income.
A non-concessional or after-tax contribution is extra money you contribute that you’ve already paid tax on. It might come from your take-home pay, savings or a windfall.
A contribution to super that anyone over the age of 55 can consider after selling their home. You may contribute some or all the proceeds into your super account (how much depends on your circumstances). You don’t have to pay tax on a downsizer contribution. Find out more about downsizer contributions.
Most people can make salary sacrifice contributions until the age of 75, and most employers offer a salary sacrifice option. It’s important to get advice to make sure salary sacrifice is a good option for your own personal situation.
Salary sacrificing is one way to make a difference to your financial position when you retire.
There are limits on how much you can contribute each year, called contribution caps. Go over the cap, and you may have to pay extra tax.
The pros include building your super for retirement, while potentially saving on tax. The cons are that you reduce your take-home pay and you have to be careful not to exceed the before and after-tax contribution caps. There are also rules around when you can withdraw your super.
It’s important to consider if contributions are right for your situation.
You need to be 55 or over and have owned your home for at least 10 years. And there are some other rules that apply.
Downsizer contributions are added to your super balance, which is included in the assets and income test – so yes, it could impact your eligibility.ÌýIt’s important to get advice on how it could affect your situation.
[S1]ÌýBefore contributing, consider the current annual contribution limits. Exceeding these limits may reduce any tax benefits you could receive. VisitÌýaware.com.au/grow
[S2]ÌýSalary sacrifice will save tax in many but not all circumstances and will cause a reduction in your take home pay.
[S3]ÌýCheck your eligibility for the government's super co-contribution before acting on this information.
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