Salary Sacrifice & Co-contributions Calculator

Should I make extra super contributions before or after tax?

 
You can use the HIP Super salary sacrifice and co-contribution calculator to find out if there is a financial advantage in making extra super contributions from your pre-tax (before tax) salary via your employer, compared to making personal (after tax) contributions from your income/own money.

‘Salary sacrifice’ means you sacrifice (contribute) some of your pre-tax salary for super contributions.  The contributions reduce your gross salary and therefore the amount of personal income tax you pay on your income.

“After tax contribution” means you make contributions from your after tax income.  If you make an after tax contribution, the government may pay a co-contribution into your fund if you are eligible.  You are generally only eligible for a co-contribution if you earn less than $61,920 (2009/10).  The calculator will calculate the amount of co-contribution you may receive (on the Results page), based on the personal contribution amount and salary entered.  The calculator assumes you meet the other eligibility criteria for the co-contribution scheme.

There is a contribution tax at a rate of 15% on employer contributions (including salary sacrifice) but this may be less than your marginal tax rate. This contribution tax is factored into the amount of pre-tax contribution shown on the calculator.

The calculator relies on certain assumptions (see below). Please note that if the assumptions used are not correct or if there is any variation from these assumptions, this may have a significant impact on the projected outcome.

Please note: these calculators are Windows compatible only. You require Java to be enabled in the preferences settings of your browser.

STEP 1

Enter all the relevant details.

STEP 2

Click on the "Summary" tab to see the results of your calculation. You should find that by making salary sacrifice contributions, your take home pay will be higher than if you make super contributions from your after-tax salary and you can sacrifice more to your super.

Important Notes

1. The salary figure usually means your regular gross pay, but commissions or other allowances may be included depending on your own particular circumstances.
2. Contributions made by you on your own account are not taxed. Contributions made by your Employer are taxed at a rate of 15% which is much less than the marginal tax rate on your income. The contributions shown as salary sacrifice contributions include the contributions tax to be paid by your Employer.
3. The calculator makes no allowance for the effects of tax on your benefit when it is eventually removed from the superannuation system (“End Benefit Tax”).  End Benefit Tax varies according to such factors as the age at which the benefit is taken and whether the contribution is made after tax (no End Benefit Tax) or from salary sacrifice contributions (subject to End Benefit Tax).  These factors vary according to individual circumstances.  You should seek advice on the effect of these issues from your financial adviser or accountant.
4. The calculator automatically allows for the government co-contribution if eligible. To be eligible you must contribute to your super from after-tax income. The co-contribution for the 2010/11 year is $1.00 (up to a maximum of $1,000) for every $1 contributed for income levels up to $31,920, gradually reducing to zero for income levels up to $61,920.
5. The figures are based on the assumptions above and are GENERAL ILLUSTRATIONS ONLY. They are not intended to be a substitute for professional financial advice.
6. HIP and its related companies specifically disclaim any liability (whether based in contract, tort, strict liability or otherwise) for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with the access to or use of this calculator.
7. Other than as required under consumer protection law, under no circumstances will HIP and its related companies be liable for any loss or damage caused by a user’s reliance on information obtained by using this calculator.
8. You should not make any decisions on the information contained herein without first consulting with your financial adviser or accountant.

You may wish to seek professional financial advice as to the assumptions that would best suit your particular circumstances.

We have included some economic data to allow you to put the assumptions in context.

* The survey returns are net of tax and investment management charges