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If you are a middle to high-income earner, then making a contribution to your super from your before-tax pay may make a significant difference to the net amount of tax you need to pay. Any contributions you salary-sacrifice are taxed at 15% and are not treated as assessable income for taxation purposes. This means the amount salary sacrificed is not subject to your marginal tax rate.

However, amounts salary sacrificed into super also contribute to an individual’s concessional contributions cap.  If the concessional contributions cap is breached, the excess contributions over the cap are subject to penalty tax. It is therefore important to speak with a financial adviser to ensure that this strategy is appropriate for you.