Salary Sacrifice – How Does It Boost My Super?

Salary Sacrifice – How Does It Boost My Super?

Salary Sacrifice is a great strategy to help you boost your superannuation balance from pre-tax income. Amounts are limited to $25,000 for the FY17/18 including the amount paid by your employer as Super Guarantee. Tax savings can be as much as 30% on the amount contributed depending on your current marginal tax rate.

Despite the salary sacrificed amounts into superannuation being income tax free, a 15% contributions tax still applies on the way into your superannuation fund. For individuals with taxable income greater than $250k the contributions tax increases to 30%.

Salary Sacrifice – An Example

Susi is a journalist and earns $120,000 per year working for the Sydney Morning Herald. Her employer pays her 9.5% super guarantee contributions of $11,400 for the year. $13,600 then remains available of the $25,000 cap which can be made as additional pre-tax contributions through salary sacrifice.

Susi decides to put an extra $1,000 per month into her super as salary sacrifice which only impacts her net pay by $630 per month due to the tax benefit (37% marginal rate). The 15% contributions tax is deducted when the $1,000 reaches her Super, adding $850 to the fund. Susi is better off by $220 every month she employs this strategy. She thinks this is a great deal because it’s a new pair of shoes or nice night out, each month courtesy of the ATO.

Don’t forget the funds are locked in the superannuation account until you reach retirement age, however Susi is likely to be delighted to find she’s earned a great return on her superannuation fund, including these additional contributions, compounded over the years she has until retirement.

Salary Packaging

Salary packaging could be available on a wide range of expenses and items depending on your industry sector and your employer’s salary packaging policy. Eastern Health for example, allows employees to pay for many expenses from their pre-tax salary including living expenses, professional development and even airline lounge memberships.

How Can Endorphin Wealth Management Help?

We recommend, and the ATO agrees, that you seek professional financial advice before you consider making any type of salary sacrifice arrangement. We can assist you to:

Calculate how to maximise salary sacrifice and other benefits to boost your retirement savings

Determine how much you need for a comfortable retirement & setting up strategies to reach your retirement goals. Once you’re ready to retire, we can assist by setting up an income stream and accessing age pension benefits.

Find the right super fund for you. Does it have the right investment options and fee structure to make most of your important nest egg?

Identify if your super invested in the right way. Are you comfortable with the risk / return of the fund to help protect against market shocks?

Comprehensive analytics and research

We invest a great deal of time and effort researching the best tax effective investment strategies for our clients. We have developed a number of systems to manage and track the marketplace.

The investment landscape always evolves and it is more important than ever to consider your investments and superannuation funds carefully. We pride ourselves on being experts in researching opportunities, investments and strategies that fit in with your retirement goals. We want, our clients to get on with enjoying their life rather than worrying about money.

For an obligation free conversation about your financial future, please contact us on 03 9603 0072 or at

Phillip Richards and Robert Rich
Endorphin Wealth Management

Phillip Richards is a qualified Financial Advisor with over ten years’ experience. 
Contact Phillip today to discuss how you can build your own wealth and plan to reach your retirement goals.

Robert Rich is a qualified Financial Advisor with over nine years of personal investment experience. 
Contact Robert today to discuss how you can build your own wealth and plan to reach your retirement goals.

This information is general in nature and does not take your personal situation into account.

Contact Us for quality financial advice so you can feel good about your future.