SALARY SACRIFICE & WEALTH BUILDING It’s that time of year again – tax time! Time for a quick rundown on salary sacrifice, wealth building and our top 2023 tax tips here at Orange Financial Planning. It’s nearly the end of financial year and a critical time when we can make some serious inroads for people when it comes to building their wealth and also minimising their tax. Whilst many approach the end of financial year with a sense of dread, we see it as a real opportunity from a financial planning perspective to get focused – get in and do what needs to be done. 2023 TAX TIPS Everyone loves a good old tax tip this time of year. We all know that the goal of tax planning is to arrange your financial affairs to minimise your taxes. Now is a crucial time to start thinking about the basic ways to reduce your taxes, along with the variations within each method. You can reduce your income, increase your deductions, and take advantage of tax credits. Four tax minimisation strategies to consider…
  1. Make concessional super contributions up to the $27,500 per year limit to your super fund by salary sacrifice. This allows a tax deduction to be claimed and reduces the tax rate to 15 percent.
  2. Make non-concessional contributions with the excess funds available of up to $110,000 per year or use the bring forward rule of $330,000 for the 3-year period.
  3. Invest some of the money from your bank account in non-super managed investments which will be eligible for imputation credits on dividends and subject to capital gains tax which is more lenient than income tax.
  4. Investment loan interest costs, together with ongoing expenses, can normally be claimed as deductions against your taxable income.
WHAT IS SALARY SACRIFICE? Pre-tax super contributions occur when an employer pays part of your pre-tax pay into your super account, this is called salary sacrifice or salary packaging. You can make super contributions of $25,000 per year to your super fund through salary sacrifice. This sum includes your employer super guarantee contributions of approximately 10 percent of your gross salary per year, allowing for a tax deduction to be claimed reducing the tax rate to 15 percent. You are also able to make non-concessional super contribution of up to $100,000 per year after tax. This is money taken from your savings or income and then transferred to your super fund where they will not be taxed again. If you do end up being taxed higher than you should due to your original, higher income being assessed you will receive a refund. If you are below the age of 65 you could be eligible to make contributions of up to $300,000 per annum, known as the bring forward arrangement. If you are eligible to make these donations, larger than the annual limit, you can automatically access future year caps. If you are looking at ways to reduce the tax you pay per year and boost your super balance, I cannot think of a better way to do it than salary sacrifice! WHY CHOOSE TO SALARY SACRIFICE? Concessional contributions (deposits into super) are taxed at 15 percent which is lower than the marginal tax rate for most people. If you do not choose to salary sacrifice this money will be taxed at 32.5 percent or higher depending on your annual salary. These contributions are beneficial as you will be paying less tax while increasing your retirement savings. If you choose to salary sacrifice pre-tax, your assessable income will be decreased resulting in less tax being paid. By choosing to salary sacrifice while working you will end up with more money in your super fund when you choose to retire. This is beneficial as once you reach the age of 60 your super balance becomes TAX FREE! REACH YOUR GOALS IN THE NEW FINANCIAL YEAR WITH ORANGE FINANCIAL PLANNING! Here at Orange Financial Planning, we would love the opportunity to be your trusted advisor and to help you reach your goals in the new financial year. Your goals are the first thing we look at when we start the process of making a financial plan. We believe in focusing on every aspect of your life, as each area can affect another. As shown below in Your World, it is important to understand your – Goals, Concerns, Interests, Current and Future Situation.
Your World


Now you have begun the process of seriously thinking about your big picture – act on it! Give us a call at Orange Financial Planning TODAY to schedule your 30 or 60 minute meeting!

Looking forward to helping you reach your goals in the new financial year!

Tyron Mitchell

Contact us today on (02) 5310 4477 or drop us a line HERE!

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Mitchell Advice Pty Ltd ABN 44 625 356 872 t/as Orange Financial Planning is a Corporate Authorised Representative of Synchron AFS License No 243313. Unless specifically indicated, the information contained is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek personal advice from a financial adviser.