How Much Can You Salary Sacrifice to Super? What Are the Limits?
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- Опубліковано 28 чер 2024
- This video will help you understand how much you can salary sacrifice by using a simple calculation and applying it to your personal situation.
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⏱ Timestamps
00:00 - How Much Can I Salary Sacrifice?
01:00 - Types of Contribuitons
01:22 - Concessional Contributions
02:10 - General $27,500 Cap
03:55 - Carry forward rule
04:17 - Carry Forward Rule Example
05:42 - Salary Sacrifice Example
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*Salary Sacrifice Limits: How Much Can you Contribute To Super*
Knowing how much you can salary sacrifice is essential in optimising your super contribution strategy, especially if you are edging closer to retirement, are a high-income earner or have sold an investment with a large capital gain.
Salary sacrifice super limits are based on the general concessional contribution cap and any unused carry-forward contributions from previous years.
To calculate how much you can salary sacrifice, you need to also take into account employer contributions and personal concessional contributions. And, I’m going to show you exactly how it’s done.
Maximising your salary sacrifice contributions is likely to save you thousands of dollars in personal income tax and, in some cases, tens-of-thousands of dollars. Plus, you’ll be investing more in the tax-effective superannuation environment.
#SuperGuy #ChrisStrano #Superannuation #RetirementPlanning
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General advice is provided by Toro Wealth Pty Ltd trading as SuperGuy Retirement Experts as an Authorised Representative of Core Value FA Pty Ltd (AFSL 480387).
Before acting on any information, you should seek professional advice and verify our interpretation/s before relying on the content or calculators within this website or on the videos, while also considering its appropriateness in relation to your personal situation.
This video is worth it for the info on checking your carry-forward concessional contributions alone - thanks!
Glad it was helpful!
Your content is an absolute gem and will help many Australians improve their retirement landscape!
Thanks Chris. I don't understand why there is a super balance max of $500k for Carry forward cap. You'd think the govt would want people to have as much in their super as possible to reduce the drain on the pension budget. I guess tax revenue is the priority, but its robbing Peter to pay Paul.
Super is taxed at 15% and 0%when you start pulling it out. So i guess the gov doesn't want yout o have troo much in there. Otherwiwse they start taxing you more.
Thanks for the tip to check the cap in the My Gov ATO super section, I spent a lot of time trying to figure that out, didnt know it was so easy.
No problem. Glad it helped!
Love your work! Thanks for educating me about Super 🤩
Love the journey Chris.
Thanks to you and Shane
Glad to hear it, Eddie.
Great information, and just in time. Currently reviewing my super 🙂
Im glad to find your channel. Thank you so much.
You're welcome David. Thank you for your comment.
Thanks mate, this is gold!
You're welcome.
Great video.
Good video very well presented and explained
Glad you liked it!
Hi good info .. I had no idea about the carry forward contibution
Glad it was helpful!
You missed a crucial fact. The cap is based on the Super Fund Income Year NOT the employee's Income Year. This means the cap is based on when the employer deposits the super. One can apply to transfer funds between years but you need a special circumstance. Some ATO Officers are total ##### and can make up bogus reasons for rejecting the transfer. While I did not pay 1c over the cap, my employer was undergoing a change of ownership and make the payment hours late and ended up in the following year. I ended up paying over 140% tax on the excess based on employers payments thanks to a punitive tax. The punitive tax no longer applies but one can still exceed the cap. According to ATO, employees should get an agreement with the employer ensuring the super is deposited on nominated dates, but no employer will agree to that.
Excellent point. The cap is based on the date of receipt of contributions by the super fund. This can be monitored by keeping track of the contributions going into your super account via the transaction history.
Man the Australian tax/super system is so convoluted.
Hi Chris! Are you able to do a video on non-concessional contributions? Advantages and disadvantages? When should non-concessional contributions be done rather than concessional? What are the tax implications of non-concessional contributions in retirement, death etc?
Hi Kressley, we actually have a video on this coming shortly. Stay tuned.
Subscribed and 539 liked, I am already SS into my super along with company and personal monthly contributions, I think I'm already at the $27,500 limit but I'll have to double check.
You're all over it!
This is a great video. It would be good to show what the persons after tax take home pay would be so we can figure out how much we can afford to sacrifice as to meet other financial obligations. Do you have a calculator that can does this or recommend one the ones online I have tried aren’t very good.
No yet, Gazman, but it's coming! We are currently building more calculators, which will be published soon.
How does the SG amount impact Defined benefit schemes? When I asked it seemed as though there is no employee contribution or it is factored into the scheme. I will seek more clarification.
There is a missing information in this video.
Contributing towards the "Carry forward amount" is still taxed if your incomes + Super >= 250k per year.
See Division 293!
I really don't understand this rule and why it applies to the "carry forward" contributions; as those payments are some sort of a delayed contribution of the previous years; when the income was lower.
Hi Chris thanks for covering this salary sacrifice option. My question relates to my wife who has the ability to deposit her full wage to her Super Fund. She is well under $500,000 and is using the carry forward provisions. She at 66 is allowed to withdraw funds at will for day-to-day living expenses. She was wondering that since the first $18,200 of her wage is usually untaxed would the ATO give her a refund at the end of the year after the Super Fund taxes it concessionally at 15%? As her wage fluctuates somewhat it's hard to calculate exactly what amount to ask her pay office to direct to Super. In her case it's done online and you don't have the option of changing each pay fortnight. WE have been Googling this subject and not found much to help. Maybe a Call to the ATO?
Hi Chris,
Very useful presentation and content
My question is: is salary sacrificing a good option for someone who’s not a permanent resident or Australian Citizen who might have to leave Australia for some reason let’s say in the next 10 years. I do plan to settle down in Australia but I want to know if its a good idea to salary sacrifice if in case I have to leave for personal reasons.
The benefit of salary sacrificing in any one year is to reduce personal income tax. The same preservation rules generally apply whether you reside in Australia or elsewhere.
Chris, I hear we'll be able to contribute $30,000 as of July 1. Good news!
Hi Chris - I'd love to see a video about in-specie transfers in super. There is not much talk about it, the super funds seem to have no idea about it either.
In-specie transfers from one super account to another signifies a change in legal ownership (from one super fund trustee to another). A change in legal ownership is a capital gains tax event. The only benefits of in-specie transferring would therefore be to reduce/eliminate transaction costs and reduce time out of the market. Industry super funds wouldn't be able to in-specie transfer assets at all and retail super funds can in-specie - but only for assets on the investment menu of both funds. Because of all of this, in-specie transfers are not a very common occurrence within the superannuation environment. Was there a particular scenario where you believe in-specie transfers are suitable or beneficial that I might be missing?
@@SuperGuyAu Thanks Chris. Canna Campbell (sugar Mamma tv), in her book Motivated Money, says it is imperative that super funds offer in-specie transfer. I called my fund (Aus Super) and also hubby's super fund, and neither fund had heard of 'in-specie transfer'. According to Canna, it is very important at retirement. She recommends Asgard in her book as being one of the funds that offer in-specie transfer. however I transferred out of Asgard years ago as the fees and returns were terrible.
@@hannkg7715 Canna may have a different opinion to me. I wouldn't say it's imperative for a super fund to offer in-specie transfers. There may have been context around why she said this.
@@SuperGuyAu That is interesting. She is the only person I have ever heard discuss this.
For FHSS if you've sacrificed 15k general concession can you use carry forward?
Thanks Chris. Was sweating it whether I was going to go over the $27500 cap this year, Now I know I can even afford to put a bit extra in to get my taxable income down a bit more even, your a champ. But what happens if my super balance goes over $500K this next coming year, does this mean I can only only have contributions up to $27500 for the next financial year?
No problem, Dieter. The $500,000 rule is based on you total super balance on 30 June of the previous financial year. So, if your balance is $500k or more on 30 June 2023, then only $27,500 can be contributed as concessional contributions in the 2023/24 financial year.
@@SuperGuyAu Awesome, I get it now, thanks champ.
Is the 500K super balance for an individual or for couples in a SMSF
Great video. If youre paying income protection and life insurance expenses through super does that get excluded from the concessional cap? I.e. if your intent it to maximise to the concessional cap would it be better to move insurances out of super. I believe they are still tax deductibile outside of super. Thank you
Great question Karl. If the premiums are paid from your super account member balance, the premiums will not count towards the cap. However, if the premiums are paid directly from your bank account to a 'super-owned insurance policy', then it will count towards the cap.
@SuperGuyAu thank you. Really helpful to know 👍
My friend is on the top tax bracket. 59 years old. He has 4 investment properties. He is sick of the stress of having them and wants to sell them all. I told him to wait till he retires and sell one each year. I told him about your service with the one payment system. He is happy to pay if he gets value for money but if he doesn’t like and doesn’t use the advice then he pays for nothing. I feel the same way but would like advice and estate planning in a few years. How can customers and your self come to some agreement where both are happy. It’s like trust me pay me and then your not knowing what your getting. What is the solution seeing you do this ever day? Thanks.
What would happened if you went over by mistake the non concessional cap? Thanks.
You can opt to release the excess. If you don't release it, it will be taxed at top marginal tax rates.
is this including the first home super saver scheme?
Voluntary contributions to super (including concessional and non-concessional) can form part of the first home super saver scheme.
Do carry forward amounts work for FHSS?
Yes, you can use carry-forward amounts for FHSSS.
I was under the 500k amount in june 22 and when my 22/23 return was done my employer had put in an amount that put me over the threshold and I got taxed and extra 5k so got no return...
Sorry to hear!
Hi Chris, my super balance is > 500k for some years, so my salary sacrifice can not carry over. My total contribution to my super before tax this year looks like to be $37500. $27500 is taxed at 15%. What is the tax rate of the excess $10000? Thanks
The excess is taxed added as taxable income to your personal income tax assessment and taxed at your marginal tax rate. There is no penalty as such, it is simply taxed in the manner it would have been had you received the excess amount as personal income. You will be able to withdraw up to 85% of the excess contribution amount to assist with paying the additional tax. If you exceed the cap, you will receive an excess contribution determination from the ATO with your options. Read more here www.ato.gov.au/individuals/super/in-detail/growing-your-super/super-contributions---too-much-can-mean-extra-tax/?anchor=Ifyouexceedyourconcessionalcontributions#Ifyouexceedyourconcessionalcontributions
Is AustralianSuper fees high relatively to other supers?
This depends on your account balance and investment option chosen. But I would not say that they are overly high relative to other super funds. There are both lower-cost funds and more expensive funds compared to AustralianSuper.
I am in an old state govt super. Unlimited.
Great video! I have a carry-forward contribution amount I haven’t utilized. Can I deposit a lump sum payment and claim a tax deduction (say I pay 37% marginal tax rate, do I get a 22% refund on the amount deposited?) or do I salary sacrifice every month more into superannuation and still get the 15% tax benefit (up to my carry-forward limit)?
$27,500 employer plus salary sacrifice for the year plus an additional $10,000 salary sacrificed (carry-forward) being $37,500 taxed at 15% in total?
If you are an employee, you can either salary sacrifice or make personal concessional contributions. If you salary sacrifice you will need to speak with your payroll officer at work. If you make a personal concessional contribution, you will need to notify your super fund of your intention to claim a tax deduction for the level of personal contributions you wish to deduct and then ensure you receive confirmation from them and complete the appropriate steps on your individual tax return. It is highly recommended that you seek advice from a tax accountant during this process.
@@SuperGuyAu cheers. I hope my accountant can assist me here. I’ll ask.
New limit. 30k as of July 24 and 120k non concessional.
That's the plan
I was just now told by a rep for Aware super, that the ATO will want the tax payment for the the excess SS (Beyond current years$27500.00) that I have made to my super.
20th may 2024
I have made 16k personal contribitutions after tax (will change that to 1812.79, and claim that through the Aware Super online carry forward intent to claim form, then I think I have to claim it from the ATO before I do the 23-24 tax return?)
I have 31k in sg and ss contributions, this exceeds the 27.5k cap, I thought they would automatically use the carry forward amounts. but apparently they don't?
Carry forward amounts for past 5 years are in excess of 80k.
Just now spoke to a rep with the ATO, apparently it is automatic, seems there was confusion of what is the cap, IE the cap being all this and past 5 years unused.
My accountant suggested that I put in only $31,000 whereas carry forward amounts to much more. Why is that?
I can't be sure without speaking to your accountant, but my best guess would be this: Tax on concessional contributions incur tax of 15%. Therefore if you contribute too much, your personal taxable income will fall below the tax-free threshold of $18,200 and you would be paying contributions tax of 15% instead of 0% due to the tax free threshold.
@@SuperGuyAu oh, that's good too know as well.
what happens when you go over the 27500? As I have ….
Hi Jason, if you do not have any unused carry-forward concessional amounts or are not eligible to utilise them, then you will receive an excess contribution notice from the ATO. The excess amount will be assessed at your marginal tax rate, just as it would have been had you not exceeded the cap. You will also be eligible to withdraw the excess amount. There is no penalty, as such - just an effective rearrangement so that you do not receive additional tax concessions. Red mor e here superguy.com.au/superannuation/excess-contributions-tax/
Really useful. Unfortunately I don't have enough spare cash to put in the 40k I could add.
Glad to hear it was useful.
@@SuperGuyAucould you kindly do the topic about self-employee superannuation contribution from company income please? Thank you for your time.
so is this financial year the last time you can use the 2018/19 unused amount
Hi Chris. An unused amount from 2018/19 can be used until the end of the 2023/24 financial year, at which stage it will expire.
@@SuperGuyAu one more year then to find the cash
@@chrisj6321 All the best!
IMO the rule that you can't use the carry forward of unused concessional contributions if your super balance is > $500K is a completely arbitrary rule and makes no sense . $500K is terms of super is nothing if you are in later stages of your career , if you haven't been able to use all you concessional contributions then you should be able to roll forward no matter what your balance is. The fact is you didn't get to use them ( and there's no restriction of the per year concessional cap WRT to super balance) so why get penalised when you want to roll forward ? Just another example of Canberra logic
I don't disagree with you. It is completely arbitrary. And you're right, $500k is not a big number these days.
so technically people can have like 90k+ available to carry forward? Thats crazy
Even more. The annual cap is currently $27,500 and an unused amount can be carried forward for 5 years. This is one of a number of crazy rules that can be beneficial once you know how it works.
holy crap! thank you my man @@SuperGuyAu
If you have more than $500000 and you are over 60 yrs old could you withdraw enough money to be below $500000 tax free? Then you could pay your carry forward concessional amount??? Thanks
Hi Paul, the $500,000 balance rule is based on what the balance is on 30 June of the previous financial year. But yes, if eligible, a withdrawal could be made from super to bring the balance below $500k prior to 30 June, so that carry forward amounts could be utilised the following financial year. However, one should be mindful of any tax, transaction cost and time out of the market implications, etc.
why can't people who are over 50 and want to fund their own retirement put in as much as possible without getting taxed for the last 10yrs of working so they don't have to rely on the Government in retirement, seems absolutely stupid that we can't put in enough to make ourselves a comfortable retirement...
You can put after-tax contributions in without getting taxed. Just not pre-tax contributions.