There are a few reasons why you might make an after-tax
contribution over sacrificing some of your salary (or vice versa).
Reasons to consider after-tax contributions:
- You’re a low-income
earner. This means you don’t get taxed a lot, so what you save on tax through
salary sacrificing isn’t worth taking home less pay.
- You're eligible for
the Government co-contribution, which is an amount the Government contributes
to your super.
- You’re not locked
into scheduled contributions and can make one-off payments whenever you want
- Your employer
doesn’t offer salary sacrificing arrangements.
Reasons to consider salary sacrificing:
- You may be getting taxed a decent amount, so whatever tax savings you may be eligible for through salary sacrificing might not be worth it.
- You save on tax by
lowering your overall taxable income, as more of it is going into your super
- You prefer to add
to your super in a way that's hands-off, with automatic scheduled payments
made by your employer.
Before making an after-tax or salary sacrificed contribution, you need to be aware of the contribution caps that apply. If you exceed the cap, you may need to pay extra tax.
The Government limits the amount you can contribute to super, as well as the tax benefits available.