Following the loss of tax concessions on fund earnings underpinning TRISs their popularity plummeted but they still have their uses. Quite apart from providing pre-retirement income, which is their actual purpose, they can also be useful in quarantining tax componentry. An additional advantage may present itself as part of a salary sacrifice strategy.
Though there is no tax concession on earnings within the super fund, the income received by an over 60-year-old member is received tax free so this can be used to advantage.
| Let’s assume a member has a $100k salary package, including 11.5% superannuation contributions. | |
| Salary | $89,686.00 |
| SGC | $10,314.00 |
| Total | $100,000.00 |
| After Tax Income | $71,992.00 |
| After Tax Super Balance | $8,766.90 |
| Net Result | $80,758.90 |
| If the member salary sacrifices enough to maximise concessional contributions the situation changes to: | |
| Salary | $70,000.00 |
| SGC | $10,314.00 |
| Salary Sacrifice Contribution | $19,686.00 |
| Total | $100,000.00 |
| Reduced After Tax Pay | $58,212.00 |
| Add After Tax Pension Payment | $13,780.00 |
| After Tax Income | $71,992.00 |
| After Tax Super Contribution | $25,500.00 |
| Minus Pension Payment | $13,780.00 |
| After Tax Super Balance | $11,720.00 |
| Net Result | $83,712.00 |
This is a benefit of $2,953.10, or 3.67%, represented by the increased balance in superannuation. Be careful though, some employers may seek to reduce their SGC commitment by applying it to the reduced salary level.
