Author Topic: Should / Can I package + sacrifice to optimize tax?  (Read 1538 times)

Evasion

  • 5 O'Clock Shadow
  • *
  • Posts: 72
Should / Can I package + sacrifice to optimize tax?
« on: February 19, 2020, 02:45:16 AM »
Hello,

I am trying to figure out the best tax option.
Numbers are approximate but you get the idea.

1/ Can you still sacrifice on top of salary packaging or does the packaging cap affect how much sacrifice you can do?

2/ should I go for the full on solution in your opinion or keep a bit more cash and therefore flexibility?

Salary is 95k + super.
Max packaging (rent+debit card + meals card) = 35k
Maxing super concessional contributions requires 16k on top of compulsory guarantee.
95-51=44k taxable income.

After tax I would have about 38k net left, which I would save entirely as I would live on the package.
If I add the sacrifice to that I would save 54k a year, close to 60% saving rate.

BUT I am locking most of it inside super and receive less income in cash.

What would you do?
Interested in your opinion, especially if you work for an organisation with Public Benevolent Institution status.

Cheers

marty998

  • Walrus Stache
  • *******
  • Posts: 7249
  • Location: Sydney, Oz
Re: Should / Can I package + sacrifice to optimize tax?
« Reply #1 on: February 19, 2020, 03:11:17 AM »
For #1, you will need to ask your employer. Generally this is employer specific, even if there are special rules for the public service and not for profits.

For #2, it depends on how old you are, your family circumstances and if you need savings outside super for FIRE.

deborah

  • Senior Mustachian
  • ********
  • Posts: 12033
  • Location: Australia or another awesome area
Re: Should / Can I package + sacrifice to optimize tax?
« Reply #2 on: February 19, 2020, 03:42:13 AM »
I once worked in a place where you could do this (when the rules were different - so take Marty's advice), and the salary packaging reduced your actual salary, so you were paid less compulsory super. I understand that can happen still in some workplaces. You REALLY need to check your actual workplace conditions.

Evasion

  • 5 O'Clock Shadow
  • *
  • Posts: 72
Re: Should / Can I package + sacrifice to optimize tax?
« Reply #3 on: February 19, 2020, 03:53:09 AM »
Thanks for your answers.
The packaging won't reduce how much super they pay me, I've read the policy.
I'll ask about how it interacts with sacrifice.

I'm under 30, married no kids, and do need savings outside of super for FIRE but keen to take advantage of the tax possibilities..