Salary sacrifice to your West State Super account
You can choose to give up or ‘sacrifice’ part of your before-tax salary and have it paid into your West State Super account instead.
This is generally a tax-effective way to grow your super. To start salary sacrifice contributions, you need to set up a contractual agreement with your employer, called a salary sacrifice arrangement.
West State Super’s unique features
West State Super is a constitutionally-protected, untaxed fund. These unique features may provide extra benefits when you make salary sacrifice contributions.
Salary sacrifice contributions are not taxed upfront1
Having an untaxed fund means you only pay tax when you withdraw your benefit or roll your super into a taxed fund or retirement income stream.
With an untaxed fund, 100% of your contributions are invested in your chosen plan, instead of only 85% if you had a taxed fund. You receive investment returns on the full amount of your contributions, which means you might see a slightly higher benefit over time.
Salary sacrifice contributions to West State Super are not capped
While you’re working for the WA public sector, you can sacrifice up to 100% of your salary into your West State Super account. This can help you to build your retirement savings, especially in the lead up to retirement.
Concessional contributions made to West State Super will count towards your concessional contributions cap, but they are not capped within that scheme. However, they will count towards your cap for the purposes of making contributions to a taxed scheme. For example, if you make $27,500 in concessional contributions to West State Super (including your employer contributions) you wouldn’t be able to make any further concessional contributions to a taxed scheme (assuming you have no unused concessional contributions cap carry forward amounts available).
With West State Super, an untaxed plan cap applies to the untaxed element of your benefit. This is the amount you can accumulate and still be taxed at the concessional rate when you access your money. The untaxed plan cap for the 2021/22 financial year is $1.615 million2.
West State Super example: meet Amanda
Here’s an example of how salary sacrifice and its tax benefits work. Amanda’s annual salary is $70,000. She makes a personal contribution of $5,200 a year ($100 a week) to her West State Super account.
Comparing super contributions with and without salary sacrifice
The table below shows the differences between contributions made from Amanda’s after-tax income (without salary sacrifice) and contributions made from her 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 Amanda’s super||$0||$5,200||$5,2004|
|Total benefit (income plus super)||$55,383||$55,383||$57,205|
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 her employer:
- Amanda has contributed $5,200 to her super without reducing her after-tax income by the same amount This is because she has only paid income tax on $64,800 instead of $70,000.
- Over the year, Amanda’s tax has reduced by $1,822 ($14,617 minus $12,795), and her take-home pay has only reduced by $3,378 ($55,383 minus $52,005)
- Amanda has reduced her income tax by about $35 a week ($1,822 divided by 52 weeks) with her $100 a week contribution to super At the same time, her take-home pay has only reduced by about $65 a week ($3,378 divide by 52 weeks).
- Amanda has increased her total benefit (net income plus super) by $1,822 ($57,205 minus $55,383)
- Amanda’s salary sacrifice contributions are not taxed at the time they are made to her West State Super account5, so the full amount of her contributions are invested in her account
- Tax will only be need to be paid on her untaxed benefit when it is paid to her, or rolled over to a taxed fund or retirement income stream.
For more information visit the West State Super and tax page.
The cost of salary sacrifice depends on your provider
You can usually salary sacrifice directly to your West State 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.
If you want to sacrifice more than 50% of your salary into your West State Super account, the WA State Government requires you to get financial advice to help you make an informed decision.
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, indexed annually in line with Average Weekly Ordinary Time Earnings, in increments of $5,000 rounded down. The untaxed plan cap applies for each untaxed scheme you are a member of.
3 Includes low income tax offset of $28.
4 West State Super is an untaxed fund and generally no contributions tax is applied. Instead, there is a lifetime limit (referred to as an untaxed plan cap) of $1.615 million per super fund for the 2021/22 financial year (indexed annually) which applies to the untaxed element of your benefit. The lifetime limit represents the amount that can be paid as a lump sum or rolled over to a tax fund and still be subject to concessional tax treatment.
5 If you are a high income earner whose income and relevant concessionally taxed contributions exceed $250,000 then you may be liable for Division 293 tax. For more information see the Tax and super brochure.
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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.