Salary Sacrifice Case Studies

Medium-high income

Vivian has recently been promoted to Senior Manager and earns $85,000 per year. This means she is taxed at the marginal tax rate of 38%.

Vivian has been concerned about not contributing enough money into her super to ensure a good lifestyle in retirement. Now that she is earning a better salary, she realises it is the perfect time to contribute to her super.

But, what effect would Salary Sacrifice have on her take-home pay?

'After talking to RBF we worked out I can afford to Salary Sacrifice $150 per fortnight. If I take that $150 in my fortnightly pay I would have to pay 38% income tax. That means I will only get $90.75 in my pocket. However, if I Salary Sacrifice the $150 I pay just 15% contributions tax, so my RBF Investment Account receives $127.50'.

Now that Vivian is Salary Sacrificing she feels more confident that she'll be able to afford an enjoyable retirement. Because Salary Sacrifice reduces Vivian's assessable income, in effect it only costs her $90.75 to save $127.50 every fortnight.

Now that's value for money!

Medium income

Daniel is a Business Analyst and earns $50,000 per year. Daniel's marginal tax rate is 30%.

'I read the Salary Sacrifice fact sheet on the RBF website and decided I needed to know more about how it could work for me. After using the Salary Sacrifice calculator on the web, I worked out I can afford to sacrifice $100 per fortnight. The best thing about this is that my fortnightly salary only reduces by $68.50, and I'm contributing $85 extra every fortnight into my super! Imagine what that will grow to over the next few years.'

Low income

Joanne works part-time as a Project Officer and earns $29,000 per year. She pays 15% income tax.

As Salary Sacrifice contributions are taxed at the same rate as Joanne's salary, there is no tax advantage for her to Salary Sacrifice. Joanne decides to continue to make personal contributions to her super and receive the Government Co-contribution. However, next year when Joanne returns to full-time work, she will look into Salary Sacrifice again.

Contributory Scheme member

Joseph is a teacher and an RBF Contributory Scheme member. He earns $64,000 per year and is taxed at the marginal tax rate of 30%.

Joseph currently contributes 5% of his fortnightly salary into his super through personal contributions. After reading about Salary Sacrifice on the RBF website he wondered whether changing his contribution method would be more beneficial for him.

'I contacted RBF and they talked me through my options. I found out that by switching the way I contribute to Salary Sacrifice I will increase my take-home pay by $23.89 per fortnight. This is because I no longer pay income tax on the money going into my super. Now I have to decide whether to use this money to make personal contributions to my RBF Investment Account, or increase my Contributory Scheme contribution rate to 6%'.

*5% plus grossed up amount sufficient to cover 15% contributions tax. 5% of salary will be paid to Contributory Scheme.