Salary Sacrifice

Written and accurate as at: 10 January 2017

You may have already heard of salary sacrifice, but do you know what does it actually means and how to make the most of it?

In our animation, we consider the tax-effective and wealth accumulation benefits of entering into a salary sacrifice arrangement with your employer.

It is important to note that everyone’s financial situation is different, so the benefits of salary sacrifice (as well as the arrangements offered by your employer) will differ from person to person. While salary sacrificing into super is a tax effective way to build your retirement nest egg, you should consider your net cash flow and any other arrangements you currently have in place.

There are other super strategies available also such as co-contribution, spouse contribution or superannuation contribution splitting. Note, from 1 July 2017, you may be able to make personal tax deductible superannuation contributions in addition to or instead of salary sacrificing.

If this is something that you wish to explore, it is important to talk to your adviser and understand the ins and outs of this strategy.