How does salary sacrifice work in australia

However the administration costs need to be considered. As such, some employers only offer limited forms of packaging. The advantages of salary sacrifice are that you are buying the benefit in pre tax dollars. That is, if your tax rate is If salary sacrificed super contributions are made to a complying super fund, the sacrificed amount is not considered a fringe benefit for tax purposes. The amount of the contribution will not be liable to fringe benefits tax and the contributions will not be included as a reportable fringe benefit amount on the employee's payment summary.

Salary sacrificed contributions are treated as employer contributions. As superannuation contributions are not subject to FBT and are not reportable benefits, they are attractive to salary package. The employee on higher marginal tax rates will have higher savings. Salary sacrificed contributions to a super fund form part of the 'concessional contributions' in the fund. However, there is a cap on the amount of concessional contributions that each member can enjoy each income year.

If a person has contributions made to more than one superannuation fund, all contributions are aggregated. If the concessional contributions cap is exceeded any excess concessional contributions are included in the assessable income for the corresponding year and taxed at the person's marginal tax rate.

They are also liable to pay the excess concessional contributions ECC charge. If the concessional contributions cap is exceeded and the calculated tax liability for the year includes the excess.

Any excess concessional contributions withdrawn from the fund also no longer count towards the persons non-concessional contributions cap. Looking for advice on salary sacrificing? We can help you out.

Maxxia will handle your information in accordance with its Privacy Policy. How Does Salary Packaging Work? What is salary packaging? How does it work? Usually, we pay for these things once our payroll department has taken tax out of our salary. Am I eligible? What are capped benefits? How much could you save? Prev All Articles Next. Related articles. I work in Health, how much can I Salary Package? Handy Hints. Novated Leasing.

Salary Packaging. Full Name. Popular tags. Car expenses. Tax time. Finance options. Salary package a car. Maxxia App. March Remember: To qualify for a tax deduction for a voluntary personal super contribution, you must notify your super fund and your tax agent of your intent to claim the deduction before you lodge your tax return.

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Reading time: 4 minutes On this page How do you benefit? Reduced taxable income By putting more of your salary into your super account, you reduce the amount of income on which your income tax is calculated.

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