A senior superannuation specialist has reminded SMSF members to ensure any salary sacrifice contributions they wish to allocate to their fund for this financial year are established well before 30 June.
Chartered Accountants Australia and New Zealand superannuation leader Tony Negline noted the key for salary sacrifice strategies to be successful is to make the contributions “well before tax time”.
“To make the most of [the] super and tax advantages [stemming from salary sacrifice arrangements] it’s important not to leave it too late,” Negline said.
“The ATO guidance is clear: you can’t go back in time and sacrifice wages you’ve already derived, but the good news is you still have a bit of time to play with before 30 June 2022.”
In the process of setting up salary sacrifice contributions, he warned SMSF members to always take the concessional contributions cap into consideration.
“Salary sacrifice contributions are concessional contributions. There is an annual cap on concessional super contributions, where a lower tax rate applies, which this financial year is $27,500,” he said.
“The cap is calculated considering both your employer and your personal super contributions claimed as a tax deduction.”
On a positive note, he advised SMSF members not to forget about the ability to carry any unused portion of their concessional cap for a five-year period if their total super balance is less than $500,000.
“The way this works is to look at whether you have any unused concessional contribution caps from a prior financial year. But amounts carried forward that have not been used after five years expire, so it is ‘use it or lose it’,” he noted.
Apart from salary sacrifice arrangements, he also highlighted another contributions avenue SMSF members should consider.
“The other way of boosting your super balance is to make a personal tax-deductible contribution from your after-tax wages or other spare cash you might have,” he said.
