The potential tax savings offered by salary sacrificing can be quite significant. Salary sacrificing superannuation means that you will save your marginal rate of tax on the amount of superannuation you are salary sacrificing. Due to changes to Superannuation and Fringe Benefits Legislation, however, this can be a minefield.
Not Available To All
Salary Sacrificing is not be available to all employees; check with your employer.
Who May Benefit
If you are employed by, for example, the Department of Education or Health, or a benevolent/charitable institution the Fringe Benefits Tax exemptions on home loans & private health funds to name a few make salary sacrifice irresistible.
Be aware that superannuation has salary sacrifice limits related to age and amounts. If you breach these limits or ‘caps’, then penalties may apply.
It is equally important that you stick to your plan and monitor your investment. For example, if the contributions are received by the fund in the wrong financial year, this could cause a timing difference which inadvertently breaches a ‘cap’.