We know that employers need to make a Superannuation Guarantee (SG) contribution on your behalf from your salary. If you are a starter to the SG world, it will interest you to know that you can make additional salary sacrifices, an arrangement where your employer puts in extra contribution of a pre-stipulated amount on your behalf.
Salary Sacrificing arrangement
By paying a salary sacrifice you prepare better for your retirement, given that your Super balance is boosted. The good point is the tax merit attached to the arrangement. Instead of 46.5%, you are only levied a tax of 15% on your super contributions made via the salary sacrifice arrangement.
Know about the concessional contribution cap
Money deposited by employers as part of the salary sacrifice is treated as concessional contributions, and hence, you must adhere to the concessional contribution cap to avoid imposition of penalties.
For the year 2013/14, the concessional cap for those who are below the age of 60 is $25,000 and $35,000 for those who turn 59 years of age by 30 June 2013.
Supposing your employer does not agree
There can be occasions where your employer does not agree to the arrangement. In such cases, he, however, has to keep paying the SG amount. Oftentimes, because of the disputes that may arise on a later day, it is crucial to have a written agreement pertaining to salary sacrificing. Also, you will do well to prefigure what goes down as your salary? Does it include overtime and shift changing bonuses?
Few extra factors to prefigure about sacrificing your salary
Additionally, you also have to talk to your employer and figure out how frequently will he pay the salary sacrifice on your behalf. Will it be paid as many times as the salary itself or less/more number of times?
How are you placed with your employer in terms of salary sacrifice?
