ADF salary sacrifice super allows you to swap some of your before-tax pay into your super fund. These are concessional contributions and

They also reduce your taxable income – meaning you might pay less tax than if that money was taken as ordinary income. But there are a few things to consider. For more information about the ADF salary sacrifice super, click here.

Tax

Salary sacrifice is an arrangement between you and your employer to forgo a component of your salary in return for benefits. These could include extra super contributions, novated car leases or self-education expenses.

Your taxable income is reduced by the amount you sacrifice in your salary. It is because before-tax contributions (either your own or your employer’s) are taxed at 15% on entry to your account.

The higher your marginal tax rate, the more benefit you get from salary sacrificing to super. The investment earnings in your super are also taxed at a lower rate than your income, so the more you earn, the greater the potential benefit.

Remember, however, that salary sacrifice reduces your take-home pay, and you may need to budget. Your salary-sacrificed contributions count towards your annual concessional contribution cap of $27,500. If you have unused cap space from previous years, you can contribute more than this limit, but it’s worth checking with your payroll team first.

Investments

Salary sacrifice is a way to boost your retirement savings by contributing money from your before-tax salary to your super account. These contributions reduce your taxable income and can make a big difference to your future wealth, especially over a long investment timeframe.

Salary sacrificing can be cost-effective if you’re careful not to exceed your concessional contribution cap or incur Division 293 tax penalties. However, seeking professional financial advice is essential to understand how it applies to your situation.

ADF salary sacrifice super is the default military superannuation arrangement for Australia’s Defence Forces and Reserves, who joined after 1 July 2016. It replaced the military’s previous pension scheme, the Military Superannuation and Death and Invalidity Cover Arrangement (MSIC). If you wish, you can move to another military super fund, but it must comply with the

ADF’s requirements.

Access to funds

If your employer offers salary sacrifice arrangements, you can add before-tax money to your ADF Superfund. It could be a lump sum or regular payments from your salary before tax. It’s usually a good idea to talk with your employer before agreeing on this arrangement and to get it in writing.

Salary sacrificed contributions and Employer Superannuation Guarantee (SG) contributions are taxed in your super at 15%. For people with higher marginal tax rates, this can mean significant savings.

In addition to the standard SG contribution rate of 11%, Triple S members have access to a unique benefit known as the Super Choice option. It enables members to make extra pre-tax contributions, up to a lifetime cap of $27,500 annually. It is a great way to turbo-boost your retirement savings and help you reach your financial goals sooner rather than later.

Choosing a fund

Before you set up a salary sacrifice arrangement, it’s worth talking to a financial adviser. They can help you understand the pros and cons of salary sacrificing and check your eligibility.

While salary sacrifice does reduce your take-home pay, it’s a tax-effective way to boost your super balance. That’s because investment earnings within your super fund are only taxed at a maximum rate of 15%, which is generally less than your marginal income tax rate.

Suppose you’re a Permanent Forces or Reserves member on continuous full-time service (CFTS). In that case, you can move from your default ADF Super fund into a new superannuation accumulation fund managed by CSC – the ADF Super and ADF Cover arrangement. However, you can’t return to the original Military Superannuation and Benefits Scheme (MSBS), closed to new members. To find out more, visit the CSC website. For more information about the ADF salary sacrifice super, click here.