• There is additional 2% Medicare to pay in addition to tax rate
• You can actually earn up to $20,0542 before paying any tax – after applying the low-income tax offset.

Salary sacrifice is a type of concessional contribution to the super. If you are unsure what concessional contributions are, have a look at this article explaining types of contributions to super:  What is superannuation? How does super work? 

2. So let’s now see the real-life examples.

The average income in Australia is almost $85,000, but to be on conservative side, for the purpose of this exercise I picked the income of $70,000 to show you this comparison.

We have two friends –Mary and Susan – both nurses, both on $70,000p.a, and both wanting to save $10,000pa for their future.

To read the full comparison between Mary’s and Susan’s savings outcome and how salary sacrifice helps, see the full video: How to Salary Sacrifice to Superannuation

2. How to choose super fund

Let’s be honest, what we all really want from our superannuation/pension fund is:

• lowest charges,
• best returns with minimum risk,
• super fund that looks after your interest as members,
• and provides you with a free advice.

Sorry to disappoint you, but none of the super funds will do that for you.

So, unfortunately as with anything else in life, to make a good choice, you need to do a bit of work and research. But I am here to help you and give you some suggestions how to make this process easier.

But first, let’s start with the most important information about superannuation in Australia, which I can see is still a confusion:

From 1st January 2021 the super choice law was extended giving more Australians ability to choose their own superannuation fund – so you are no longer locked into your employer’s super fund.

So every employer needs to offer their employees a choice of fund, Here is the link to the Tax Office page where you can find more information.

There are lots of videos and articles you can find that give information about “the best super fund”, but mainly what I see is the advice to choose your fund based on level of fees or as the government advertises – based on performance.

As important as those are, there is no such thing as the best super fund.
There are over 500 superannuation funds in Australia and thousands of different investment choices. Choosing one can feel like a daunting task.

Choosing the super fund that will best suit your needs, as I said is complex, and requires a bit of work on your part.
So, I will go over the steps that I take when choosing and recommending a fund for my clients.

What types of super funds can you choose from and how they differ?

• Retail funds – These are funds run by financial institutions. They are generally open to anyone. They are regarded as more expensive type, but due to ongoing market competition, their pricing have come down considerably and they tend to provide very good investment choices.
• Industry Super Funds – These funds are generally designed for people who work in a particular industry, but some industry funds will allow anyone to join, but just because your employer provides you with this option, does not mean you have to accept it, you can choose your own fund. There is an inherent believe that they are “cheep” funds, but the truth is that as the market matured, and with great deal of corporate competition, Industry Funds had to include many investment options to stay in competition, with pricing now being similar to those of retail funds in a lot of cases.
• Public sector funds – These funds are generally only open to government employees.
• Corporate funds – These funds are usually only available to employees working for a specific employer. If your employer provides you this option, you can either take it or request your own. They tend to be more expensive than other funds, but they do provide a great deal of investment choices and often an incredible insurance package available to employees with no medical check requirement.
• Self-managed super funds (SMSFs) – These are funds where you have more responsibility in terms of administration, compliance and investment decisions. SMSF is very complex and outside of the scope of our discussion here, but if you decide to have your own SMSF you can request your employer to make all Superannuation Guarantee Contributions (SGC) as well as your Salary Sacrifice Contributions to your fund. It is a super fund like any other and it is your choice.

Your employer will likely provide you with a Superannuation Standard Choice Form when you commence your employment with them. Alternatively, you can download this form from the Australian Taxation Office’s website.

For the full explanation of super or pension fund investment choices as well as fees and charges please read the full article: How to choose super fund 

3. Catch-up Concessional Super Contributions

Often, when we reach the age of 50 or 60 we start to worry about our retirement.

Do I have enough for my retirement?

Is it too late to save sufficient balance to have safe retirement?

And you might have a reason to worry, because superannuation in Australia, which is our best form of retirement savings, is filled with rules, regulations, and super contribution limit.

However, I might have some great news for you, and today I would like to explain a little-known contribution opportunity that might help you to:

• catch up on those lost years of not contributing enough,
• grow your super and ultimately retire better,
• get tax benefits in the form of tax-deduction for your contributions,

This little-known contribution is: – carry forward super contributions, otherwise known as Superannuation Catch-up Concessional Contributions

But first, let’s review very quickly what concessional superannuation contributions actually are.

Those are your deductible contributions, so contributions for which someone claims tax deductions which includes:

• Superannuation Guarantee Contributions (SGC) which are your employer’s contributions, and that’s your employer who is eligible for tax deduction.
• Your salary sacrifice contributions,
• if you are self-employed and you want to claim tax deduction for your personal contributions
• or even you are a private person, you can still claim tax deduction for your personal contributions,

But we all need to play by the rules.

The annual limit on this type of contribution is $25,000per annum.

I am assuming that you checked if you are actually eligible to contribute to super in the first place. If unsure – view this article. If you prefer, watch my video instead.

If you need to get familiar with superannuation contributions rules, including SG contributions – here is another article for you or alternatively watch that video.

If you would like to understand the benefits of Salary Sacrifice – here is another video for you.

What are carry-forward contributions?

Carry-forward contributions (so-called catch-up contributions) or as the proper industry naming is: Carry-Forward Unused Concessional Contributions, are not any special type of super contribution, but often overlooked contribution opportunity, allowing you to contribute to your superannuation fund the amount of concessional contribution that you have not used in previous years, up to each year contribution limit, and up to 5 years.

After five years, any unused amounts expire.

4. Superannuation Fees & Charges

Most people in Australia these days have majority of their savings within the superannuation, whether in an accumulation stage or in a pension stage. And the size of the superannuation investing will only be growing over time.  

Here is the list of the 20 biggest super funds in Australia: Is your super fund listed here?