There are two ways to contribute more of your salary to super through your employer: salary sacrifice and non-concessional contributions. So what are they and how do you set them up?
What is it?
After-tax contributions are known as ‘non-concessional contributions’ because you don’t receive a tax deduction. After-tax contributions are the simplest way to add to your super as you simply deposit your personal money into your super account.
If you can spare the money, you can really boost your super savings by making after-tax contributions. You will usually save more by investing through super than by investing in the same assets outside super.
Contributions from your after-tax income don’t get taxed when your fund receives them because you have already paid tax.
To set up non-concessional contributions through your employer ask your payroll to deduct the money from your net wages before paying you. They will then forward the money to your super fund for you.
What is it?
Salary sacrifice is a way to contribute to your super before tax. These contributions are then taxed at a fixed rate that’s usually less than income tax.
If you want to sacrifice some of your salary to super you should enter into a formal agreement with your employer. It is best to include the details in your terms of employment. This ensures your employer calculates their 9.25% super guarantee contribution on your original salary. You can also go to your payroll officer and advise them on the amount you wish to have come out of your gross pay per week and they will then deduct that from your wages and forward the money onto your super fund for you.
Donna has over 17 years experiance in the financial industry and is practised in all facets of financial planning, including retirement, wealth creation, gearing, superannuation and risk insurance.
The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.