Reading a very good book by Noel Whittaker (Money Made Simple) and he describes the following; If I ask my employer to salary sacrifice, would I receive the difference ($1,428 in this case) in my pay for the same outcome? An online calc is showing an extra $2k difference in take home pay after the sacrifice but I've never heard of this before! Also, any negatives to doing it or any suggestions to help maximize pre-tax dollars?
Yes - in the first instance, it was coming from after-tax income. So salary sacrifice will reduce your gross income only. Depending upon your employer - it is legal for the employer to use your post-salary sacrifice salary for calculating their contribution to the employer SGC. So although you may sacrifice $3530, your employer may reduce your gross and short-change your super by 9.5% of $3530 (about $300) - so have a chat to your employer before you commit.
Thanks @Scott No Mates, was t aware of that sneaky little loophole they could take advantage of, thanks for pointing it out! Will read up more on it and ask how they do it, hopefully it'll be worthwhile.
@House - it may seem insignificant but it's cost me over $1,000/annum especially if you decide to sacrifice as much as possible.
Just remember that salary sacrifice allows you to exchange taxable income for taxed employer contributions subject to the concessional cap (soon to become $25K pa if it isnt already). In theory take your marginal tax rate incl of medicare and deduct 15% and that's what you save. Just bear in mind it remains preserved. However higher income earners may also be affected by Div 293 tax. That taxes the contribution again at an additional 15% tax. The proposed budget change would affect anyone who earns more than $250K (Thats $250K incl of the employer contrbutions!). However they still need to compare their marginal rate to the 30% tax and it may still be a saving.
