What is Salary Sacrifice?
A salary sacrifice strategy allows you to make contributions to your Superannuation Fund using pre-tax money. The process typically involves advising your employer that you wish to salary sacrifice a nominated amount each pay period.
The benefits of salary sacrifice include:
∙ Your superannuation account is boosted by making additional contributions;
∙ For income tax purposes, your taxable income is reduced by the amount you sacrifice to super, which could result in lower personal tax payable; and
∙ Tax on super contributions made via salary sacrifice is calculated at the concessional rate of just 15%. This compares to your personal marginal tax rate which could be as high as 47% (including Medicare Levy).
Considerations of salary sacrifice include:
∙ Contributions made are subject to the preservation rules. Depending on your age, this could result in the inability to access those monies for quite some time; and
∙ As funds are being directed to superannuation instead of after-tax income, personal cash flow could be affected. This could be of particular importance for those servicing debt or incurring larger expenses.
Salary Sacrifice Advice
Superannuation is arguably the most tax-effective way to save for your retirement, as contributions, income and withdrawals are taxed at a concessional rate.
We help clients understand superannuation, investment options, contribution strategies and how they can tax effectively accumulate funds for retirement.
At the initial meeting, we can assess existing accounts, strategies and elaborate on the benefits of making salary sacrifice contributions.
About JR Financial Planning
At JR Financial Planning, we believe that true financial planning can only be delivered through a complete understanding of individuals’ goals and objectives.
Our process adopts a measured and educational approach with clients. This helps promote a better understanding of the strategy, as well as potential legislative implications, economic and market conditions. We seek peace of mind for our clients and always encourage questions to be asked.
Ongoing, clients have unlimited access to our Certified Financial Planner®. This also includes the provision of regular updates on economic events and how they may impact on one’s strategy or portfolio.
At JR Financial Planning, superannuation advice is only provided to clients by a Certified Financial Planner®.
The CFP® is the highest level of certification that a financial planner can achieve and is a commitment to abide by a Code of Professional Practice, including Code of Ethics, Practice Standards and Rules of Conduct.
Address: PO Box 170, Kew East VIC 3102
Phone: 03 9859 4654
Mobile: 0404 83 53 73