Comment SALARY and I will send you more information about this strategy

Comment SALARY and I will send you more information about this strategy.

Salary sacrifice is one way to potentially reduce your personal income tax while building your superannuation savings.

It involves arranging with your employer to contribute part of your pre-tax salary directly into super, rather than receiving it as take-home pay.

For many Australians, income falls within a marginal tax bracket of 30%, plus the 2% Medicare levy. By comparison, salary sacrifice contributions are generally taxed at 15% when they enter super.

This means there could be a tax saving of up to 17 cents per dollar contributed for someone in that tax bracket, depending on their circumstances.

For example, sacrificing $10,000 into super could result in approximately $1,700 less tax compared with receiving that amount as salary, assuming the standard tax rates apply.

While salary sacrifice reduces your take-home pay, it can be a tax-effective way to build your retirement savings.

It may also be useful if you are saving for your first home, as eligible voluntary contributions can potentially be accessed through the First Home Super Saver Scheme.

However, contribution caps, your income, additional taxes and when you can access your super all need to be considered before setting up an arrangement.

Comment SALARY and I will send you more information about this strategy.

General advice only. This information does not take into account your objectives, financial situation or needs. Consider whether it is appropriate for you and seek personal advice before acting. Superannuation and tax laws can change, and tax outcomes depend on individual circumstances.

Amy Lehmann is an Authorised Representative (No. 1292710) of Consortium Private Wealth Pty Ltd (AFS Licence 495401).