Boost Your Super and Save on Tax: How Salary Sacrifice Can Benefit You

Opting to boost your superannuation contributions through salary sacrifice can be a strategic way to reduce your taxable income. When you choose to allocate more of your salary to your super, the amount you contribute is deducted from your taxable income, potentially leading to significant tax savings.

To illustrate, consider Gary, who earns an annual salary of $80,000. If Gary decides to salary sacrifice 5% of his salary into his superannuation fund, he will effectively contribute $4,000 directly to his super. This move reduces his taxable income from $80,000 to $76,000.

By decreasing his taxable income in this manner, Gary not only enhances his retirement savings but also benefits from reduced tax liability. In this case, the $4,000 salary sacrifice translates into a tax saving of $1,280 for the financial year, showcasing how salary sacrificing can be an effective tool for both growing your super and optimising your tax situation.