Salary sacrifice is generally a tax-effective way to grow your super account - by ‘sacrificing’ part of your before-tax salary to your super account, instead of having it paid to you.
You can salary sacrifice to your GESB Super or West State Super account if you’re currently employed in the WA public sector.
If you’re a Gold State Super member and you would like to make salary sacrifice contributions over your maximum Average Contribution Rate, they need to be made to your GESB Super or West State Super account. If you don’t already have one of these accounts, we can automatically open a GESB Super account for your extra contributions.
Benefits of salary sacrificing
Here are some reasons you might decide to salary sacrifice:
- You’ll pay less income tax
Your taxable income is reduced by the amount you salary sacrifice, which means you could pay less income tax
- There could be other tax benefits
Super is generally taxed1 at what’s known as a concessional rate of 15%. If you compare this to your marginal tax rate, your total benefit (i.e. net income plus super) could increase through salary sacrificing. Of course, this tax benefit depends on your personal circumstances
- Salary sacrifice is flexible
You can easily start, stop or change your salary sacrifice contribution amount as your situation changes
- It’s cost-effective
You can generally salary sacrifice contributions at no cost into your GESB account through your employer, if you are a WA public sector employee
See how salary sacrifice works with your account
Salary sacrifice rules, including contribution caps, are different depending on whether you have a taxed GESB Super account or an untaxed West State Super account.
If you’re in our defined benefit Gold State Super account, you are subject to your Maximum Contribution Rate.
Here are some examples to highlight how salary sacrifice could work with your account:
It’s easy to get started – just follow these 5 simple steps
1. Learn about salary sacrificing
Watch our video above, or read the information below to check that making salary sacrifice contributions is the right option for you:
- Salary sacrifice for GESB Super
- Salary sacrifice for West State Super
- Benefits of contributing to your super
2. Find out if salary sacrifice is right for you
Salary sacrifice is a great way to grow your super but there are a number of factors to consider first.
To contribute extra to your super, you need to be under the age of 65 or, if you are between 65 and 75, you must have worked at least 40 hours in a period of 30 days in the current financial year, or you must be exempt from the work test.
From 1 July 2020, if you're aged 67 to 74, you will normally need to meet the work test in order to make contributions to your super. However, members aged 67 to 74 may be able to rely on a work test exemption if their total superannuation balance was below $300,000 at the end of the previous financial year.
Salary sacrifice may not be the best option for you if your taxable income is likely to fall under the tax-free threshold. You need to consider the tax rates appropriate to your annual taxable income.
If you want to know more specific information around your unique situation, such as how much to sacrifice, you may want to get professional advice from a qualified financial adviser.
3. Work out how much you’d like to salary sacrifice
Work out how to make the most of your salary sacrifice contributions, by using our Contributions calculator.
Fill in how much you’re willing to give up from your take-home pay, and we’ll estimate the most effective way for you to make your contributions.
4. Check with your employer
When you’re working out the best way to add to your super, check with your employer to confirm what salary sacrifice arrangements they have.
If you only want to salary sacrifice directly to your super account, you can usually do this at no cost through your employer’s payroll system, if this is in line with your employer’s agreement.
Your employer should be able to arrange for your super contributions to be deducted from your before-tax salary.
From 1 January 2020, salary sacrificing will not affect the amount your employer contributes to your account.
Prior to 1 January 2020, employer Superannuation Guarantee (SG) contributions may have been calculated on your reduced salary and your salary sacrificed amount may have counted towards your employer's SG obligations. This depended on the details of your salary sacrifice arrangement. You should check the terms of your arrangement to see if this applied to you.
5. Start salary sacrificing
They will send your contributions directly to us on your behalf. If you already have another type of salary sacrifice set up, simply contact your salary packaging provider for details on how to set up salary sacrifice for your super.
If you would like to go through a salary packaging provider you or your employer already use, simply contact them for help setting up your salary sacrifice arrangements. You may be charged a fee by the provider.
Other important things to know
Before you make a decision to salary sacrifice to your super, it's important to understand:
- Once you add money to super, you generally can’t access it until you meet what’s known as a condition of release, e.g. when you retire
- It’s important to find out how your super will be taxed
- In accordance with WA State Government policy, if you want to salary sacrifice more than 50% of your salary, you will need to obtain financial advice before entering into a salary sacrifice arrangement
- Salary sacrifice is a type of contribution you make before tax (when you make after-tax contributions, tax has already been paid so no further tax applies to these contributions)
- Salary sacrifice contributions don’t count towards the Commonwealth Government Super Co-contribution
- There is a limit to the amount of concessional (before-tax) contributions you can make to your super each financial year. Find out more about the contribution caps
- The amount you salary sacrifice will be reported by your employer on your PAYG payment summary - this amount could affect whether you’re eligible for:
- The spouse super contributions tax offset
- A deduction for personal super contributions
- All dependant tax offsets
- Services Australia and Centrelink benefits (e.g. Family Tax Benefit, Child Care Subsidy)
1 West State Super and Gold State Super are untaxed schemes. Tax is generally only payable when you access your benefit, or when you roll over to a taxed scheme or retirement income stream. For more information, read the Tax and super brochure.
- Find out more about getting financial advice
- Call us on 13 43 72
Thank you for printing this page. Remember to come back to gesb.wa.gov.au for the latest information as our content is updated regularly. This information is correct as at 28 October 2020.