Salary sacrifice to your GESB Super account
You can choose to give up or ‘sacrifice’ part of your before-tax salary and have it paid into your GESB Super account instead. This is generally a tax-effective way to grow your super1.
To start salary sacrifice contributions, you need to set up a contractual agreement with your employer, called a salary sacrifice arrangement.
Your concessional contributions cap
GESB Super is an example of a taxed fund. The general concessional (before-tax) contributions cap is currently $27,500 per financial year2.
You’ll pay more tax on any contributions over the amount of your cap
If you reach your cap and still make contributions to your super, then you may have to pay extra tax.
Carry forward concessional contributions from 1 July 2018
From 1 July 2019, the carry-forward rules allow you to make extra concessional contributions above the general concessional contributions cap without having to pay extra tax. If you have a total super balance of less than $500,000 on 30 June of the previous financial year, you can 'carry forward' any unused concessional contributions cap amounts from previous financial years, starting 1 July 2018. Amounts carried forward that have not been used after five years will expire.
For example, if you made $15,000 in concessional contributions in each of 2018/19, 2019/20, and 2020/21 you will have a carry forward amount of $30,000 that you can access from 2021/22.
GESB Super example: meet Ross
Here’s an example of how salary sacrifice and its tax benefits work. Ross’s annual salary is $70,000. He makes a personal contribution of $5,200 a year ($100 a week) to his GESB Super account.
Comparing super contributions with and without salary sacrifice
The table below shows the differences between contributions made from Ross’s after-tax income (without salary sacrifice) and contributions made from his before-tax income (with salary sacrifice).
No personal super contribution
Without salary sacrifice
With salary sacrifice
|Gross (before-tax) salary||$70,000||$70,000||$70,000|
|Less income tax (including Medicare Levy)||$14,617||$14,617||$12,7953|
|After-tax personal contribution||$0||$5,200||$0|
|Total take-home pay||$55,383||$50,183||$52,005|
|Net amount added to Ross’s super||$0||$5,200||$4,4204|
|Total benefit (income plus super)||$55,383||$55,383||$56,425|
Please note: the figures above are for the 2021/22 financial year. The example used in this document is for illustrative purposes only. These calculations do not take into account that you may be entitled to the temporary low and middle income tax offset (LMITO). Visit ato.gov.au for more information on LMITO.
After arranging salary sacrifice contributions with his employer:
- Ross has contributed $5,200 to his super without reducing his after-tax income by the same amount This is because he has only paid income tax on $64,800 instead of $70,000.
- Over the year, Ross’s tax has reduced by $1,822 ($14,617 minus $12,795), and his take-home pay has only reduced by $3,378 ($55,383 minus $52,005)
- Ross has reduced his income tax by about $35 a week ($1,822 divided by 52 weeks) with his $100 a week contribution to super At the same time, his take-home pay has only reduced by about $65 a week ($3,378 divided by 52 weeks).
- Ross has increased his total benefit (net income plus super) by $1,042 ($56,425 minus $55,383)
- This includes the 15% contributions tax on the salary sacrifice amount.
The cost of salary sacrifice depends on your provider
You can usually salary sacrifice directly to your GESB Super account at no cost through your employer’s payroll system, if this is in line with your employer’s agreement.
If your salary sacrifice is arranged through a third party salary packaging provider, they may charge a fee.
It’s easy to arrange salary sacrifice
You should first check with your employer to confirm what arrangements they have for salary sacrificing to your super. They should be able to arrange for your super contributions to be deducted from your before-tax salary.
If you would like to go through a salary packaging provider, simply contact them for help with setting up your salary sacrifice arrangement.
Finding the right advice
There are a number of factors to take into account when deciding whether to start salary sacrifice contributions. You might want to seek advice for your personal circumstances from a qualified financial adviser.
See our range of services and tools to help you manage your super.
1 If you are a high income earner whose adjusted taxable income and low tax contributions exceed $250,000 then you may be liable for Division 293 tax. It applies to both GESB Super and West State Super members.
2 For the 2021/22 financial year. The concessional contributions cap is indexed annually in line with Average Weekly Ordinary Time Earnings in increments of $2,500 rounded down.
3 Includes low income tax offset of $28.
4 Salary sacrifice contributions are generally taxed at the concessional rate of 15%.
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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 04 August 2021.