‘Sacrificing’ your salary isn’t as scary as it sounds. It’s simply where you and your employer agree to divert some of your before-tax pay to your super account. Salary sacrifice contributions count towards your before-tax (concessional) contributions cap.
Salary sacrifice can make your money work harder - you pay less tax and boost your super.
By sacrificing some of your before-tax pay to super, you generally get taxed at the special rate of 15%, instead of your marginal tax rate which is usually 19% to 45% depending on your taxable income.
To start salary sacrificing, you’ll need to set up an agreement with your employer. So, your first step is to advise your employer. If they don’t offer salary sacrifice, you could consider making an after-tax contribution.
Starting 1 July 2019, if your super balance is under $500,000, you may be able to go over the $25,000 contribution cap by using your unused cap amounts from 1 July 2018. This is called a ‘carry-forward’ contribution.
Say your before-tax contributions total was $20,000 in the 2019-20 financial year. That would give you an unused cap amount of $5,000 for that financial year. So, in 2020-21 you could make a before-tax contribution of up to $30,000.
Any carry-forward amounts you build up will expire if unused after five years.
You can check your contribution levels in Tasplan Online.