Salary sacrifice super

If you have a Defined Benefit account, salary sacrifice works differently, so read the Defined Benefit Account Guide (pdf) before making a decision.

Depending on who you work for in the Queensland Government, you may be already contributing 2%-5% into your super as standard contributions. Standard contributions are normally made after-tax, but you can choose to salary sacrifice them instead if you want to. You can arrange this with your payroll office or salary package provider.

If you work for Queensland Health, you can definitely salary sacrifice to your super. You can either choose to salary sacrifice an extra amount of your choice to your super, or you could change your voluntary contributions from after-tax to before-tax (salary sacrifice) contributions. You can arrange this with your payroll office or salary package provider.

Yes, you do pay 15% tax on money that you salary sacrifice into your super (or 30% if you earn more than $250,000). But because you're taking that money out of your before-tax pay, you don't then pay your normal tax rate as well.

If you made after-tax contributions to your super instead (also called personal contributions or voluntary contributions), you wouldn't pay any more tax unless you claim a tax deduction for it. If you do claim a tax deduction, you would pay both your normal tax rate on your salary and the 15% super tax as well.

You can contribute up to $27,500/year to your super, including salary sacrificed contributions. Above the limit, you'll pay your marginal tax rate on the extra contributions. Find out more about contribution caps.

For the limits on how much you can salary sacrifice outside super, such as fringe benefits tax (FBT) items, see your salary packaging company's website (e.g. Advantage, RemServ, Smartsalary).

Salary sacrificing to super and salary packaging super are the same thing. So you can ask your payroll office or salary package provider how to set up either salary sacrifice or salary packaging to your super, and they'll know what you mean.

The main things to consider are your current budget and your income level, and you can get financial advice about whether salary sacrificing to your super is right for your situation.

You need to make sure you'd have enough left in your take-home pay if you salary sacrificed. There's no point saving extra for the future if you leave yourself short today.

And if you earn under $45,000/year, there's not as much of a tax benefit to salary sacrificing - whereas on that income, making after-tax contributions can make you eligible for the government's super co-contribution.

Another option is to make a voluntary contribution (after-tax contribution) to your super and then claim a tax deduction on those contributions.

Salary sacrificing can be very tax-effective, but it's not right for everyone. A few things to consider are:

• If you earn less than $45,000/year, there's less of a tax benefit to salary sacrificing into your super.
• There are limits to how much extra you can put into your super fund each year – the contribution caps – and if you go above the limits, you'll pay your marginal tax rate on them.
• You can't claim a tax deduction on salary sacrificed contributions to your super, because you didn't pay any income tax on them.
• If salary sacrificing into super or another method would mean you don't have enough take-home pay to pay your bills, it's not worth it.

To learn more about salary sacrificing, download our Personal Contributions Guide (pdf).

Find out more ways you can grow your super, such as after-tax personal/voluntary contributions.