Salary sacrifice – not as good any more

I salary sacrifice the contributions I make to superannuation every fortnight which means I pay it before tax and only get taxed on my pay after this  contribution is taken out. Therefore I pay less tax. It’s also meant that this money didn’t show up on my assessable taxable income for my tax return. From next financial year it will.

I take it to mean this – and by gosh I hope I’m wrong but I don’t think I am – if I estimate my income at what I would earn if I didn’t salary sacrifice then it’s an enforced saving because I pay too much tax and don’t get as much child care benefit and so on because I’ve told the tax office I’m earning more than I do.

As of next financial year, my superannuation contributions will now be included so the I won’t effectively be over-estimating my income any more.

To put some numbers on it.

Say I tell the tax office I earn $30,000 per year. Out of that $30,000 I pay $5,000 in superannuation therefore making my assessble income $25,000 as far as my tax return is concerned. That means I get a nice tax cheque back.

With the new rules the the whole $30,000 is now assessable income because they’re counting the $5,000 superannuation contribution so I don’t get any, or much, of a nice tax return at all!

I knew in the back of my mind that the nice handouts we’ve been getting as part of this Stimulus package would have to be paid back and I guess this is how it will be happening – but twofold.