Option 1 – salary sacrifice to super
- On the basis of a marginal tax rate of 32.5%, if a member is looking to salary sacrifice an amount such that their after-tax salary is reduced by $1,200 p.a., they would need to salary sacrifice an amount of $1,778 p.a. ($1,200 / (1 – .325)).
- Your employer increases your super contributions by $1,778 for the year and your after-tax salary is reduced by $1,200 per year.
- Accordingly, your gross cash salary is reduced from $50,000 pa to $48,222 pa as a result of the amount of $1,778 salary sacrificed, thereby reducing tax payable on your income. Tax payable on this income is $6,139.15 (plus Medicare).
- Tax of 15% will apply to the $1,778 contributions made to superannuation, totalling $266.70. This will leave total net contributions of $1,511.30 ($1,778 – $266.70).