Salary sacrificing to super

Before-tax or ‘concessional’ contributions are super contributions that come out of your before-tax pay. They include personal before-tax contributions you make via salary sacrifice, Superannuation Guarantee contributions your employer pays for you and any after-tax personal contributions you make and claim a tax deduction for.

Potential benefits

Considerations

When you make extra contributions to your super through salary sacrifice, you’re adding to your super before income tax is deducted. Because super is generally taxed at 15%, depending on how much you earn, making before-tax contributions to your super can provide a tax-effective way to boost your super savings.

Salary sacrifice contributions are included in the concessional (before-tax) contributions cap, along with the super contributions your employer makes for you and after-tax contributions you claim a tax deduction for. This cap is currently $25,000 pa. From 1 July 2019, you can carry forward any unused portion of the concessional contributions cap for up to five previous financial years, depending on your super balance. You should consider your debt levels before adding to your super.

Claiming a tax deduction for after-tax voluntary contributions

You can also claim a personal tax deduction for any after-tax personal contributions you make to your super. Bear in mind, any after-tax contributions you claim a tax deduction for are treated like before-tax contributions and fall within your concessional contributions cap. Time limits and conditions apply.

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