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Introducing Salary Sacrifice into Super
© 2016 Willis Towers Watson. All rights reserved.
May 2017
Christopher Miles – National Manager Wealth
Carol Liffen – Relationship Manager
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Disclaimer
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 2
This presentation has been prepared without taking into account your individual
personal objectives, financial situation or needs.
Therefore, you need to consider the appropriateness of any information within
this presentation, in light of your own personal circumstances, before you act
on this information.
With this in mind, we strongly recommend that you:
consult a financial adviser before making any decisions based on the
information presented;
read a copy of the relevant Product Disclosure Statement;
read a copy of our Financial Services Guide.
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Agenda
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1. Willis Towers Watson – Who We Are
2. Introducing Salary Sacrifice into Super
− What is salary sacrifice?
− What payments can be salary sacrificed?
− How much can be salary sacrificed?
− What makes an effective salary sacrifice arrangement?
− What are the benefits of salary sacrificing into super?
− Considerations before salary sacrificing into super
3. How to Salary Sacrifice
4. Next steps
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Willis Towers Watson
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
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Willis Towers Watson Employee Benefits
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 5
Introduction
Willis Towers Watson Employee Benefits is a member of the Willis Towers
Watson Group and a specialist employee benefits practice.
Advice to employers
and employees on
superannuation and
insurance matters
Personal financial
planning advice
e.g. retirement
strategies,
investment advice
Education and market
insights
Life and Income
Protection Policies
Expat and
Domestic
Health
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Introducing Salary Sacrifice into
Super
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What is Salary Sacrifice?
An arrangement between you and your employer - where you agree to forgo part
of your future entitlement to salary or wages in return for the desired benefits
What payments can be Salary Sacrificed?
Your base/fixed salary
Bonus/sales commission and/or your IPI
How much can be Salary Sacrificed?
No specific tax or superannuation law set limits
But be aware that Concessional Contribution Caps apply
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
Introducing Salary Sacrifice into Super
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What makes an effective Salary Sacrifice arrangement?
Arrangement must be in place before you perform the work - if the
arrangement is put into place after the work has been performed, the salary
sacrifice arrangement may be ineffective
You and your employer should clearly state and agree on all the terms of any
salary sacrifice arrangement. (Intuit has a payroll deduction form for salary
sacrifice)
There is no access to the sacrificed amount. The sacrificed salary must be
permanently foregone for the period of the arrangement
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
Introducing Salary Sacrifice into Super
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What should you consider before Salary Sacrificing?
Concessional Contributions include all pre-tax contributions:
Super Guarantee Contribution (currently 9.5%)
Employer Additional Contributions (e.g. employer paid insurance
premiums)
Salary sacrifice
Bonus/sales commission/IPI payments will attract Superannuation Guarantee
(SG) contributions
The Contribution Caps are calculated on a financial year (1 July to 30 June)
Contributions are counted against the relevant caps in the year in which they are
received and credited to your super fund – don’t leave contributions to the last
minute!
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
Introducing Salary Sacrifice into Super
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What are the benefits of Salary Sacrificing into super?
A pre tax contribution from your salary into super is a tax effective way to build
your retirement savings
You can pay less tax than your marginal tax rate of up to 49% including Medicare
levy and Temporary Budget Repair Levy
Money is deducted directly out of your salary before tax, meaning you are buying
the benefit using “pre-tax” dollars
Once the arrangement is set up with payroll it happens automatically each pay
cycle (and you can vary the amount at any time)
Percentage or fixed dollar amounts help you remain within concessional caps
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
Introducing Salary Sacrifice into Super
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Concessional Contribution Caps
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Concessional Contributions from 1 July 2017
The concessional cap will reduce to $25,000 per annum regardless of age.
¹ Subject to the work test
Current Legislation From 1 July 2017
Concessional
< age 50 $30,000
$25,000 50 – 65 years $35,000
65 – 75 years¹
Excess Concessional Contributions Tax – Post 1st July 2013
From 1st July 2013, an individual’s assessable income will automatically include the amount of any excess concessional
contributions made in the year following assessment of the excess by the ATO. The excess concessional contributions
amount is taxed at the individual’s marginal tax rate, less a tax offset of 15% of the excess amount. This offset is to
compensate for the 15% contributions tax that applies within the super fund on receipt of the concessional contributions,
and is not refundable
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What Tax is charged on concessional contributions?
Concessional contributions, including salary sacrifice are classified as taxable
contributions to the superannuation fund.
Generally, 15% tax is paid on all concessional contributions, deducted form your
super fund
For very high income earners, an additional contributions tax of 15% applies for
those individuals with adjusted taxable income in excess of $250,000 (Division
293 tax)
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
Introducing Salary Sacrifice into Super
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How much have I contributed to super?
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How do I find how much I’m currently contributing before tax?
Contact your superannuation fund
AON Mastertrust (Intuit’s current default fund)
Phone:1300 880 588
Email: [email protected]
Email: [email protected]
Alternatively, Contact HR Connect
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Example of how Salary Sacrificing into super works
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The above figures assume no other income sources and takes into account the Medicare Levy
$57,578
$70,328
$90,000
($2,250) ($17,422)
$75,000 Salary
$15,000 Super
$12,750
$90,000
$67,269
($22,731)
Net position
Salary/Contribution
Less Tax
Gross Salary
This represents a $3,059 increase on
current position
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Salary Sacrificing into Super
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Why Salary Sacrifice?
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
*Maximum
15% tax on
contributions
Reduces your
taxable
income
Effective for
people with
higher marginal
tax rate
Subject to
contribution
caps
Pre-tax
Salary
Taxable
income Super
fund
%
*Additional contributions tax of 15% applies for those individuals with adjusted taxable income (including all concessional contributions) in excess of
$250,000 (Division 293 tax)
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How to Salary Sacrifice at Intuit
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How do I set up my salary sacrifice agreement?
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Step 1 Complete the salary
sacrifice authority form
Step 2 Raise a
HR Connect Case
Step 3 Attach the form with the
case by 20th of each month
Salary Sacrifice forms need to be submitted by the 20th
of each month to be effective for the following month
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Setting up and changing your salary sacrifice agreement
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Example – salary sacrifice effective June 2017
Salary Sacrifice forms submitted after the 20th
of the month will begin accruing from the following month
31st
30th 1st
Salary
sacrifice
amounts
paid to your
nominated
super fund
Salary sacrifice
amounts
accrue over the
month
20th 1st
May 2017
(Onwards)
June 2017
(Following Month)
Submit salary
sacrifice authority
forms via a HR
connect ticket
May 20th
Cut off date
for salary
sacrifice
authority
forms
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Cancelling your salary sacrifice agreement
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Example – cancelling salary sacrifice
Salary Sacrifice forms submitted after the 20th
of the month will not be effective until the following month
31st
30th 1st
Final Salary
sacrifice
amount paid
to your
nominated
super fund
Salary sacrifice
amounts
stop accruing over
the month
20th 1st
Month 1 Month 2
May 20th Cut
off date for
salary
sacrifice
cancellation
forms
Salary sacrifice
amounts
Continue to accrue
over the month
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Next steps
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Questions
Book a 1:1 session today
We are here to help, we can assist with the process
Dedicated Relationship Managers to assist with queries
over the phone or email
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