Because pre-tax superannuation amounts are taxed at only 15% (rather than at your marginal tax rate) your additional superannuation contributions will be 'cheaper' than if you paid them from your own pocket.
Packaging superannuation will result in a Reportable Superannuation Amount (RSA) on your annual PAYG Payment Summary.
RSAs do not affect your income tax liability but the ATO will take them into account when determining certain other obligations and entitlements. For more information in this regard please visit the ATO website.
It is particularly important to note that if you have a HECS/HELP debt it is likely that your repayment schedule will be affected by the RSA arising from salary packaging superannuation. If you do have such a debt please refer to the further information below.
Reportable superannuation amounts and your HECS/HELP Loan
Your HECS/HELP repayments are based upon your ‘HELP Repayment Income’, which includes any Reportable Superannuation Amount (RSA).
By default, your employer does not take RSAs into account when calculating your periodic HECS/HELP deductions throughout the income tax year. This means that if you lodge an annual tax return containing an RSA you could be faced with an additional lump-sum HECS/HELP payment requirement when you receive your ATO notice of assessment for the relevant year.
To avoid this, you can complete a Withholding declaration – Upwards variation form and provide it to your employer so that additional HECS/HELP deductions can be taken throughout the year. To calculate the amount of HECS/HELP to be withheld, follow these steps:
Refer to the ATO HECS repayment tables to find your HECS/HELP repayment rate. Record this rate in the relevant section of the Withholding declaration – Upwards variation form and provide it to your employer.
Choose the fund you wish to contribute to or, if you don’t have one, set one up.
If you’re a current Smartsalary customer, set up your super packaging online or via our mobile website and upload a copy of your super fund statement.
If you’re not already a Smartsalary customer then you will need to sign up for salary packaging via the Smartsalary website or mobile website and then set up your super packaging online or via our mobile website.
We’ll get your employer to set aside the amount you choose from your pre-tax salary. We then arrange for that money to be paid directly to your superannuation fund.