There have been changes to the superannuation salary sacrifice environment since July 2017. For some people there is a new and potentially better way to save tax. Those with ongoing salary sacrifice arrangements in place may need to review them however.
Salary sacrifice to superannuation is where an employee arranges with their employer to contribute some of their salary directly into superannuation, rather than receiving it as take home pay. This can provide considerable tax savings.
However it can be administratively difficult to set up and manage, particularly if you have fluctuating income throughout the year, or if your employer’s payroll admin is difficult to deal with.
Now there is an alternative way to achieve the same tax saving. Employees can make additional contributions to superannuation themselves, and claim a deduction for it in their tax return. This option has long been available to the self employed. Now it is available to most salaried employees as well.
There are limits, rules, timing considerations, and specific forms to be completed for this method. So make sure to get good advice specific to your situation before leaping in. But for many people this will be much simpler and more flexible than salary sacrifice.
If you have an ongoing salary sacrifice arrangement in place that was set up before July 2017, be aware that the annual “concessional contributions cap” has been lowered. It used to be $30K or $35K depending on age, but since July 2017 it has been reduced to $25K for everyone. Salary sacrifice arrangements set up in previous years to maximise your old cap, may cause you to exceed the reduced cap if they are not adjusted accordingly.