As we wave goodbye to another financial year, plenty of attention always turns to planning for 1 July onwards. For many individuals, this means reviewing their superannuation and considering their voluntary contributions for the year ahead. At this time, we receive a number of questions, so we’d thought it’d be helpful to compile a list of the top 5!
1. Is Salary Sacrifice Different to Salary Packaging?
The terms ‘salary sacrifice’ and ‘salary packaging’ are often used interchangeably. But for our purposes, we reserve the term ‘salary sacrifice’ to relate specifically to voluntary super payments. Whereas ‘salary packaging’ is broader and relates to payments/reimbursements for expenses such as rent, mortgage, cars, meal entertainment, and more.
Another difference is that salary packaging options can vary greatly across different employers. Our members, who work at FBT exempt not-for-profits, will have a greater variety of options compared to someone who works at a for-profit company. This is due to the tax concessions made available to certain organisations. However, salary sacrificing to superannuation is available to all employees in Australia, regardless of their employer’s status.
2. Does Salary Sacrificing Pre-Tax to Super Reduce My Other Salary Packaging Benefits?
No. The salary packaging limits for household, car and entertainment benefits are totally separate to salary sacrificing to super. In other words, you can keep salary packaging even if you start putting pre-tax money into super.
Although salary packaging benefits aren’t impacted, employees do need to be mindful of limits and reporting requirements for pre-tax super payments. The concessional contributions cap is the limit of pre-tax super contributions allowed before additional tax would be payable. From 1 July 2024, this is set at $30,000 per reporting year.
3. Are Salary Sacrificed Payments to Super Reportable?
Yes. The payments are made pre-tax and are not treated as taxable income but are still reportable to the ATO. They will be shown on your income statement as part of the reportable super contributions figure. This figure can be added to your taxable income when the ATO assesses your income for certain benefits (such as HELP/HECS repayments and the Medicare levy surcharge).
The reporting period is 1 July – 30 June each year.
4. How Do I Set Up Salary Sacrifice to Super?
If you would like to salary sacrifice some of your earnings to super, you can get in touch with your Payroll department. You might need to complete a form or online request. It’s a fairly straightforward process, and in many cases, it could simply be a matter of letting Payroll know how much you wish to contribute per pay!
Salary sacrificing is voluntary and can be stopped at any time.
5. Should I Get Financial Advice?
It sounds like a standard line, but we recommend always seeking your own financial advice. Keep in mind that salary sacrificed super payments relate to your future and there might be many other factors to consider. Everyone’s situation is different!
You can also conduct your own research by using such resources as the ATO’s comprehensive website, the MoneySmart site, and any internal resources your employer might have available.
Questions About Salary Packaging?
GO Salary is here to help with any questions you have relating to salary packaging and reportable fringe benefits! There are plenty of articles on our website and you can always contact us.