As an employee, you have the opportunity to contribute to your super fund through sacrificing a part of your salary. The process of negotiating with your employer and coming to terms is known as a salary sacrifice agreement. The main benefit to such a salary sacrifice agreement is that you are not taxed on the money you place in your super until you take it out.
However, the details of salary sacrifice arrangements for employees can often be overwhelming. If you do not properly understand the tax implications, you can end up making choices that don’t benefit you later on. You need to fully understand the terms and conditions of any salary sacrifice agreement you sign.
The goal of establishing a salary sacrifice agreement is to make sure you have more money available to you later when you retire. Remember, you may not be able to access that money until much later in life, so make sure your financial situation can handle that. To know if the agreement your signing benefits your situation, you should have your accountant review the terms and conditions of your specific salary sacrifice agreement.
One of the complimentary services to having your accountant review a salary sacrifice agreement is preparation of income tax returns. One of the benefits of sacrificing a portion of your salary may be that you end up in a lower tax bracket. That can mean your overall taxes are reduced, and you get to keep more of the money you earn. In order to take full advantage of your salary sacrifice agreement, consider having your accountant prepare your tax return in the same year.
Likewise, you may want to consider setting up an account to become a self funded retiree. Contributions made to your superannuation fund can be directed and invested at your liesure. That means you can have more control over what happens in your retirement account.
To learn more about preparing to become a self funded retiree, prepartion of income tax returns, and having an accountant review your effective salary sacrifice arrangement, give us a call today. Tim Nash & Associates can help you navigate the maze of these complicated tax issues.