If you are earning more than you spend, chances are you are accumulating savings in your bank.
If you are approaching retirement or simply want to boost your retirement savings, a salary sacrifice strategy could be for you.
Salary sacrificing into super is a tax-effective method of boosting your super balance, as funds are only taxed at 15% when they are contributed, rather than at your marginal income tax rate.
You'll benefit from compounding interest on the investment by increasing your super sooner.
An additional benefit is the ability to reduce your taxable income, as any money you sacrifice into super does not form part of your gross income.
If you earned $80,000 per annum, a $10,000 salary sacrifice will drop your taxable income to $70,000, allowing you to move down into a lower tax bracket.
There are strict contribution cap limits on your super, and your super guarantee (employer payments into super) form part of this personal concessional cap.
So, it’s important to seek professional financial advice before you start this strategy.