Personal contribution vs Salary sacrifice: Is there a winner?

TL;DR

This video compares the tax benefits and procedures of salary sacrifice and personal concessional contributions to superannuation, highlighting the advantages of each.

Transcript

good day and welcome to this week's video my name is robert gandy from consulting private wealth and this week we're going to have a look at superannuation contributions and compare salary sacrifice with a personal concessional contributions both of them will give you the same tax outcomes in terms of a tax saving but the mechanisms to do to do the... Read More

Key Insights

• 🚕 Contributing to superannuation through concessional contributions offers significant tax benefits, with a maximum tax rate of 15%.
• 🥶 Salary sacrifice contributions are an automatic and hassle-free way for employed individuals to make concessional contributions.
• 🤳 Self-employed individuals can opt for regular direct debits to contribute to superannuation, but need to complete notice of intent forms to claim tax deductions.
• 💄 Planning and consulting with an accountant in advance can help individuals in making strategic decisions regarding superannuation contributions.
• 🤕 The tax-free status of superannuation withdrawals for retirees aged 60 and above makes it an attractive long-term investment.
• ☠️ Regular contributions and planning can help individuals maximize their concessional contributions and reduce their average tax rate.
• 🌱 The annual concessional contribution limit varies each financial year and needs to be considered when planning contributions.

Questions & Answers

Q: What are the tax benefits of making concessional contributions to superannuation?

Concessional contributions allow individuals to pay only 15% tax on their pre-tax income, compared to their marginal tax rate.

Q: What is the difference between salary sacrifice and personal concessional contributions?

Salary sacrifice contributions are automated deductions made by employers, while personal concessional contributions need to be arranged individually.

Q: What is a notice of intent to claim form?

A notice of intent to claim form is required for personal concessional contributions, declaring the intention to claim a tax deduction on the contribution.

Q: Should employed individuals choose salary sacrifice or personal concessional contributions?

Salary sacrifice is recommended for employed individuals due to its convenience and automatic nature.

Q: What is the advantage of setting up regular direct debits for self-employed individuals?

Regular direct debits enable self-employed individuals to make consistent contributions, reducing the need for lump sum payments.

Q: How can employed individuals make alterations to their salary sacrifice contributions?

Employed individuals with a salary sacrifice set up may need to make adjustments when the annual contribution limits increase.

Summary & Key Takeaways

• Superannuation contributions (concessional) allow individuals to save on taxes, paying only 15% on income compared to their marginal tax rate.

• Salary sacrifice contributions are automatically deducted by the employer, while personal concessional contributions need to be individually arranged and may require a notice of intent to claim form.

• For employed individuals, salary sacrifice is recommended for its convenience, while self-employed individuals should consider regular direct debits, accompanied by filling in the required forms.