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Salary sacrifice2010418424

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					Salary sacrifice
A tax-smart way to boost your retirement savings
    “Through salary sacrifice I get a hassle-free
     tax benefit while building my long-term wealth.”
    Les Larkin, Westall Train Maintenance Depot, AustralianSuper member




    Making salary sacrifice
    contributions to your super
    could provide the financial
    security you need to enjoy
    life once you stop working.
    Saving for the lifestyle you want
    It’s widely believed that the average person won’t
    have enough money to live on in retirement.
    In fact, many older Australians – even those on
    high incomes – may have to work well into their
    sixties just to maintain their comfortable lifestyle
    and meet other financial obligations.




2
Salary sacrifice can help




                                                                                                     SALARY SACRIFICE
Salary sacrifice is an arrangement between you
and your employer in which you choose to give up
(or ‘sacrifice’) part of your before-tax salary to add it
directly into your super account.
By doing this, you effectively reduce your taxable
salary, which means you could pay less income tax
as a result. And, as employer super contributions are
taxed at a flat 15% (limits apply) then the sacrificed
amount could be more favourably taxed than if taken
as cash salary.

Boosting your super savings
The chart below shows how salary sacrifice
contributions can boost your super savings over
the long term.
Just $25 extra a week from age 35 could add $58,500
to your final retirement income. An extra $50 a week
could add $117,100. That’s a small extra saving now to
get the lifestyle you want in retirement.

                                                                $550,000


                                                                $450,000


                                                                $350,000


                                                                $250,000


                                                                $150,000


                                                                $50,000
 age 35                                                age 65


Opening balance of $50,000
   Employer contributions only = $349,700
                                                                           www.australiansuper.com




   Employer contributions + salary sacrifice of $25 per week = $408,200
   Employer contributions + salary sacrifice of $50 per week = $466,800

Assumptions: Opening balance $50,000 at age 35, annual salary
$60,000, 9% employer contributions, before-tax salary sacrifice
contributions of $25 and $50 per week, 7.5% Balanced Option
investment return, $1.50 weekly administration fee, 0.72%
investment management fee, 0.04% member benefit protection fee,
retirement age of 65. Final balances expressed in today’s dollars,
calculated over a 30-year investment period.
Source: AustralianSuper Super Calculator.



                                                                           3
    Maximise your ‘sacrifice’ limits
    You can receive up to $50,000 of salary sacrifice and
    employer SG contributions to super each year without
    paying extra tax. If you exceed this, then any amounts
    over $50,000 will be taxed at 46.5%.
    However, if you are over 50 but under 75 years of age
    then you can receive as much as $100,000 at lower tax
    rates. This higher limit also applies once you turn 50 any
    time until 30 June 2012. After this date the standard
    limit will apply to all. Contributions to super can’t be
    received once you turn 75.

    Voluntary contributions
    Voluntary contributions are different. These are your
    personal, extra contributions paid out of your after-tax
    salary. Voluntary contributions can be paid into your super
    account by your employer through a payroll deduction or
    by you via direct debit, BPAY, Postbillpay or cheque.
                                   ®

    Visit our website for details on making these payments.
    As these contributions have already been taxed at
    the marginal tax rate that applies to you, they are not
    taxed when deposited into your super account or if you
    withdraw your super benefit as cash when you retire.
    You can contribute up to $150,000 to super from your
    after-tax salary each year. If you are under age 65, you
    can bring forward up to two years of contributions,
    allowing you to add up to $450,000 in the one year. Any
    contributions above these limits will be taxed at 46.5%.
    If you are aged 75 or over, by law you are unable to
    make after-tax contributions to super.
    If you earn less than $60,342 a year (assessable
    income and reportable fringe benefits) and make
    voluntary after-tax contributions, the Government will
    also make a tax-free co-contribution into your super
    account. Visit www.australiansuper.com for more
    information on the Government’s co-contribution.
    For more information call us on 1300 300 273 and
    ask for our Boost Your Super Savings brochure or
    visit www.australiansuper.com/formspublications
    and download a copy.



4
Making salary sacrifice and voluntary




                                                                                                 SALARY SACRIFICE
contributions really work for you
Depending on your income, you can use either – or
both – salary sacrifice and voluntary contributions to
help your super grow.
As you can see below, different contributions can
affect the net contribution to super of a member
earning $60,000 without affecting disposable income.
                                                          Salary
                         Voluntary         Salary
                                                       sacrifice and
                       contributions      sacrifice
                                                         voluntary
                         (after-tax)    (before-tax)
                                                       contributions
Salary                    $60,000         $60,000         $60,000
SG contribution
                           $5,400           $5,400         $5,400
(9% of salary)
Salary sacrifice                 0          $1,898         $1,452
Assessable
                          $60,000         $58,102         $58,548
income
Income tax and
                          $12,900         $12,302         $12,443
Medicare levy
Voluntary
contribution               $1,300                0               0
($25 per week)
Voluntary
contribution ($305               0               0           $305
once-off annual)
Government
                               $17               0            $90
co-contribution

Disposable
                          $45,800         $45,800         $45,800
income

Net into super             $5,907           $6,203         $6,218

In calculating ‘net into super’ amounts, 15% contributions tax is
applied to SG and salary sacrifice contributions. Contributions tax
does not apply to voluntary after-tax contributions or Government
co-contributions. Tax is based on 2008–09 rates.
Source: AustralianSuper Contributions Calculator.
Please note: Under measures announced in the May 2008 Federal
                                                                       www.australiansuper.com




Budget, from 1 July 2009 salary sacrifice contributions will be
counted as part of a person’s assessable income for the purposes of
income tests for various tax and transfer programs. This may affect
eligibility for the Government co-contribution and other assistance
programs.

To access fee-for-service financial advice, see page 7
of this brochure for details about qualified financial
advisers available to AustralianSuper members.




                                                                       5
    Tax matters
    Salary sacrifice contributions are subject to a 15%
    contributions tax (limits apply). There are also other
    tax-related issues you should be aware of.

    Deductions
    You cannot claim deductions or tax offsets for salary
    sacrifice contributions. This is because your employer
    is considered to have made the contribution.
    You also cannot claim a deduction for the cost of any
    administration fees paid to your employer to enter into
    and maintain a salary sacrifice arrangement.

    Fringe benefits tax
    A salary sacrifice contribution is not subject to fringe
    benefits tax and should not be on your PAYG payment
    summary.

    Tax File Numbers (TFN)
    If you have not provided your TFN to us you could end
    up paying more tax than you have to.
    Before-tax contributions, including salary sacrifice and
    employer SG contributions, made where a TFN has
    not been provided will be subject to an extra 31.5%.
    Voluntary contributions can only be accepted if you
    have supplied your TFN.
    You do not have to provide your TFN but you may
    have to pay more tax if you don’t. AustralianSuper is
    authorised to collect your TFN and will only use it for
    legal purposes.
    Please check your last Benefit Statement and contact
    us if your TFN has not been recorded.




6
How do I arrange salary
sacrifice contributions?




                                                                                                 SALARY SACRIFICE
If your employer is willing to make salary sacrifice
contributions on your behalf, you might want to
sign a written agreement with them. Without a
documented agreement, the Australian Taxation
Office will not recognise your salary sacrifice
arrangement.
You should ensure the agreement clearly states:
• the amount of the salary sacrifice contribution
• whether it is a one-off or an ongoing arrangement,
  and
• the amount of SG contributions your employer
  must make for you will not be reduced because
  of the salary sacrifice arrangement.

Need help?
Everyone’s circumstances are different, so it’s
important to discuss your personal financial goals
with a qualified adviser.
As an AustralianSuper member, you can access
a financial adviser through Industry Fund Financial
Planning (IFFP). IFFP advisers charge on a fee-
for-service basis and do not accept sales or other
commissions.
For more information or to arrange a free initial
discussion, call us on 1300 300 273.
Note: These services are provided by a third party and not directly
by AustralianSuper. AustralianSuper does not recommend, endorse
or accept responsibility for these services. Terms and conditions
apply – these should be obtained from the relevant third party
organisation. AustralianSuper does not accept any loss or liability
for any loss or damage caused by the services provided by this
                                                                       www.australiansuper.com




third party. AustralianSuper may invest in this third party but does
not receive any commission from this organisation as a result of
members using their services.




                                                                       7
Working just for you
If you have any further questions, we’re here to help.

Call: 1300 300 273

Secure email: www.australiansuper.com/email

Website: www.australiansuper.com

Mail: GPO Box 1901, Melbourne VIC 3001




Important information: This leaflet was issued in January 2009 by
AustralianSuper Pty Ltd ABN 94 006 457 987 AFSL 233788 Trustee of
AustralianSuper ABN 65 714 394 898. This document is of a general
nature and does not take into account your personal objectives, situation
or needs. Before making a decision about AustralianSuper, consider
you financial requirements and read our Product Disclosure Statement
available at www.australiansuper.com/formspublications or by calling
1300 300 273. Investment returns are not guaranteed as all investments
carry some risk. Past performance gives no indication of future returns.
All tax rates and thresholds quoted in this brochure are for the 2008–09
year and may be subject to change in future years. Statements made by
AustralianSuper members in this brochure have been reproduced with the
members’ consent, and this consent had not been withdrawn as at the date
of this publication. ‘Industry Super Fund’ logo used with the permission of
Industry Fund Services (IFS) and this consent had not been withdrawn as
at the date of this publication.
® Registered to BPAY Pty Ltd ABN 69 079 137 518.


                                                               10266 01/09

				
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