University of New South Wales - Human Resources - Salary Sacrificing

Pre-tax UniSuper's (Defined Benefit Plan/Investment Choice Plan) and Special Purposes Super member contributions

UniSuper (DBP/ICP) members have the option to convert their existing employee contributions (7% of gross salary) and Special Purposes Super members (7% of gross salary) to pre-tax member contributions.

The converted contributions are then considered to be University sponsored benefits. Where superannuation is currently paid from an employee's after-tax income, salary sacrificing enables it to be taken from their pre-tax income, reducing an employee's taxable income as a result.

The advantage to you is that your "take home pay" is increased as a result of a reduction in tax liability. However, the following should be noted:

The converted contributions are considered to be 'University' contributions and attract a 15% contributions tax. For UniSuper (DBP/ICP) members 8.25% (rather than the basic 7% employee contribution) is deducted from pre-tax salary to compensate for the 15% contributions tax.
At retirement, salary sacrifice contributions may be subject to personal taxation whereas personal contributions are returned free of tax.
Salary sacrifice contributions are assessed for Reasonable Benefit Limit (RBL) purposes while non salary sacrifice contributions are not.
Salary sacrifice contributions are assessed for the purposes of the superannuation surcharge introduced in the 1996 Federal Budget whilst non salary sacrifice contributions are not.

Whether packaging superannuation is beneficial to you is a complex issue and will depend on individual circumstances, career planning and retirement needs.

You should seek independent financial advice before proceeding with any salary sacrificing arrangements.

Examples of packaging UniSuper (DBP/ICP) contribution:

Example 1: Level 6 - Step 2

Salary Component	Before Packaging Per Annum $	After Packaging Per Annum $
Gross Salary	43551	39958*
Taxation	(10244)	(9100)
UniSuper (DBP/ICP) Employee Contributions 7%	(3048)	â€“
Net Take-home salary	30259	30858
Increase in Take-home salary		599

*Employer contributions - $43551 mult. by 8.25% (7% plus 15% contributions tax) = $3593

*Reduced gross salary $43551 - $3593 = $39958

Example 2: Level C Academic - Step 2

Salary Component	Before Packaging Per Annum $	After Packaging Per Annum $
Gross Salary	64577	59250*
Taxation	(18876)	(16328)
UniSuper (DBP/ICP) Employee Contributions 7%	(4520)
Net Take-home salary	41181	42922
Increase in take-home salary		1741

* Employer contributions - $64577 mult. by 8.25% (7% plus 15% contributions tax) = $5327

* Reduced gross salary $64577 - $5327 = $59250

Additional contributions to Award Plus Plan and UniSuper (DBP/ICP)

You may also make additional contributions to Award Plus Plan and UniSuper (DBP/ICP) from pre-tax salary. Such contributions are exempt from FBT and there is no personal income tax payable. However, the standard 15% contributions tax will be deducted by the superannuation fund.

Additional contributions to a Private Superannuation Fund

UNSW staff have the option to pay additional superannuation deductions from pre-tax dollars to a complying private or family superannuation fund.

Please Note: Your current superannuation arrangement with the University will remain unchanged.

The following conditions apply:

Provide an appropriate written statement from the fund's trustees that it is a complying fund in accordance with the Australian Prudential Regulation Authority (APRA) and the Insurance and Superannuation Commission (ISC.)
For self-managed funds: Provide the University with appropriate documentation from the Australian Taxation Office that it is a complying fund.
http://ato.gov.au/content.asp?doc=/content/Super/19105.htm
Provide the University with the address, BSB number and bank account number of the superannuation fund plus your own superannuation account number and the amount of the fortnightly deduction.

These contributions are exempt from FBT and there is no personal income tax payable.

However, the standard 15% contributions tax will be remitted to the ATO by the superannuation fund.

Pre-tax and top-up superannuation contributions may impact on the employee's Reasonable Benefit Limit (RBL) which determines the amount of tax paid on retirement benefits.

For further information on this topic:

Visit the Tax Office superannuation website at www.ato.gov.au/super.

Phone the Superannuation Infoline on 13 10 20 for the cost of a local call.