Comment SALARY and I will send you more information about salary sacrificing

Comment SALARY and I will send you more information about salary sacrificing.

Salary sacrifice can be a tax-effective way to grow your superannuation savings, but how much should you contribute each pay cycle?

Salary sacrifice involves arranging with your employer to direct part of your pre-tax salary into super instead of receiving it in your personal bank account.

For many Australians, the marginal tax rate is 30%, plus the 2% Medicare levy. Salary sacrifice contributions are generally taxed at 15% when they enter super.

This means you could potentially save 17 cents in tax for every dollar contributed, depending on your income and circumstances.

Salary sacrifice may be particularly beneficial if you are:

Saving for your first home: Eligible voluntary contributions may be accessed through the First Home Super Saver Scheme.

Approaching retirement: It can help build your retirement savings in a tax-effective way.

Planning for the long term: Regular contributions can help grow your super over time.

So how much should you salary sacrifice each pay cycle?

There is no one-size-fits-all amount. It depends on your income, age, cash flow, retirement plans and how much money you need available outside super.

It is also important to consider your concessional contribution cap, including employer contributions, and when you will be eligible to access your super.

The goal is to find a balance between reducing tax, building retirement savings and maintaining enough cash for your everyday needs.

Comment SALARY and I will send you more information about salary sacrificing.

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).