Salary Sacrificing Tax Strategy - Reminder on the Super Contributions changes!

For those that are salary sacrificing contributions into their superannuation, its important to review the concessional contributions cap for this Financial Year (12/13). The cap has decreased for everyone to a maximum of $25,000 in super contributions per financial year.

The concessional contributions cap includes the before-tax payments into your superannuation such as:

• Employer contributions of 9% of your ordinary times earnings
• Any salary sacrificing contributions
• Personal contributions claimed as a tax deduction by a self-employed person

Even if you have more than one super fund, all your contributions into each super fund will count towards the cap.

Last Financial Year (11/12) the cap for people aged over 50 years was $50,000, but this has changed from the 1st July 2012.

So, if you used to contribute more than $25,000 into your super each financial year and haven't decreased your contributions this Financial Year, now is a good time to review as the tax penalties for going over the caps are quite severe.

The extra contributions over $25,000 are taxed at an additional 31.5% plus the 15% before-tax super contributions which totals a tax of 46.5%.

Its important to remain under the contributions cap of $25,000 for salary sacrificing into your superannuation to be an effective tax strategy.

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