Hi all
Looking into organising DH's super contributions to be paid from his pre-tax income.
Seems like a no-brainer, extra money for free, kwim?
Just wondering if anyone's got any ideas about when it's NOT a good idea to pay your super this way?
Many thanks in advance.
You might want to keep in mind that the government has actually changed some of the rules about salary sacrificing now - if you do it, you still have to declare it as income for tax purposes. Might be worth checking out the ATO website for more info - I don't know much about it, but we got a letter a few weeks back regarding the changes and how they won't let it reduce your taxable income anymore or something like that - you will have to declare how much you sacrificed and it will still count as income.
Is your DH an employee? If so, his employer is required by law to make contributions of 9% to superannuation. Any extra that you wish to contribution can be done via a concessional (salary sacrifice) or noncessional contribution. The pros of salary sacrifice include that contributions are taxed at 15% instead of whatever your DH's marginal tax rate is (this is how you save in tax) and contributing extra to superannuation increases benefits for retirement. There are maximum amounts that you can salary sacrifice and you need to be aware that any contributions will not be able to be accessed until your DH has retired. If he is in the highest tax bracket then the tax savings are obviously the highest. If you don't require the extra income then salary sacrifice may be a good idea, i would recommend speaking to a financial planner.
Bon - You are correct in that the Government has changed salary sacrificing rules, however, salary sacrifice will still reduce your taxable income but it will not reduce your assessable income for Centrelink purposes. I think this is what you are talking about
:yeahthat::
speak to a GOOD financial planner - they are few and far between
I think if you have a HECS debt and are salary sacrificing, the employer sometimes doesn't withhold enough HECS and you can get in trouble at tax time. If you are aware though, you can make sure they are holding enough back.