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Superannuation guide Salary sacrificing to super Are you an employee thinking of putting some of your pre-tax income into superannuation to boost your retirement savings? This is known as salary sacrifice, and the good news is that it can benefit you and your employer. |
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What is salary sacrifice? |
An effective salary sacrifice agreement (SSA) involves you as an employee, agreeing in writing to forgo part of your future entitlement to salary or wages in return for your employer providing you with benefits of a similar value, such as increased employer superannuation contributions. Contributions made through a SSA into superannuation are made with pre-tax dollars and do not form part of your assessable income. The CC cap is a limit to how much you can contribute to superannuation. The combined total of your employer superannuation guarantee (SG) and salary sacrificed contributions must not be more than $32,500 per financial year (2026-27). |
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The benefits of salary sacrifice |
| • | Disciplined approach to saving – individuals who struggle to save may benefit from salary sacrificing as contributions are deducted directly from pre-tax income. | | • | Tax saving is immediate – because contributions are made from pre-tax salary, the personal tax benefit is derived 'up-front'. | | • | Dollar cost averaging – salary sacrifice allows you to buy into the market at regular intervals and, therefore, reduce the risk of market timing. | | • | Easy to administer once established – you do not need to claim a deduction in your tax return or lodge a notice of intent form with your superannuation fund when salary sacrificing. | | • | Employer matching arrangements – salary sacrifice may also be attractive if your employer offers generous matching arrangements to their employees. |
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Tip Consider the carry forward rules You may be eligible to make large CCs in a year without exceeding your CC cap under the carry forward CC rules. These rules allow certain individuals to make extra CCs in excess of the general concessional cap by utilising any unused concessional cap amounts from the previous five financial years. |
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Warning Division 293 tax on higher income earners If your income plus your CCs exceed $250,000 pa, you will pay an additional 15% tax on CCs (or on the amount above the $250,000 threshold if that is lower). |
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Ask us about salary sacrifice → |
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This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. |
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Disclaimer: Blue Chip Admin provides factual information only and does not provide financial product advice or legal advice. Should you need Financial Advice, you should seek advice from a qualified Financial Planner.
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