Really loved this video, very simple to understand! Just one thing to consider though - when comparing how much tax you pay on something that's salary sacrificed vs tax paid out of your normal taxable income I think this was a bit misrepresented. In the example of earning $200,000, you compared paying 15% on $5000 vs being taxed at 45%. Realistically no one is paying 45% tax on their income. In this case it would only be their income between $140,000-200,000 taxed at that rate. Someone earning that much would in the end only be paying about 25-26% of their income in tax. So I think comparing that % against the 15% super tax rate would be a more realistic comparison of the tax savings.
Another great video Raymond. I've been salary sacrificing for a year now, $100 a week. It's great because I see my super grow and pay less tax, but the actual difference to my take home pay each week is actually only around $75, not $100 because of how it changes my weekly taxable income.
Great video!😀 Just important to that the saving in taxes are related to the tax bracket you are in, personally I wouldn't go further that 45k a year as the tax in that case is 19% (just a 4% tax savings). Also, there is something called carry-forward of unused concessional contributions, in where you can utilise the super you didn't use from up to 5 previous financial years. Thus, you can put more money in your super and get the tax benefits.
I totally agree! I'd only recommend salary sacrificing when you're in the tax bracket of 32.5% or higher as that is when the benefits are noticeable. Also good call out on the carry-forward, good tip for people who want to maximise the tax benefits.
When requesting a withdrawal for fhss purposes is the potential earning you can withdraw based on the super fund performance or is the ato shortfall interest charge rate used? It would be cool to see a comparison analysis of non concessional contributors and withdraw the after tax component 85%, compared to making a concessional contribution and filing a notice to claim the tax back. If you would then be eligible to withdraw the full contribution amount e.g. $50,000 rather than 85% of?
Glad you enjoyed the video mate. Correct, any employer contributions and pre-tax contributions you make will be taxed at 15% up to the concessional cap limit which is currently at $27.5K
Hi Raymond, been watching few of your videos and love all of them. You mentioned at the end of the video that you will be taxed a second time when withdrawing the fund, is this only apply to the FHSS scheme? And since I will be taxed a second time, will it actually be better to just save up the money myself after salary sacrifice? I am currently 19 and not sure to join this or not, definitely want to get my own house in the future tho!
Hey mate glad you are enjoying the content. It's awesome that you are so interested in personal finance at such a young age! Depending on your salary it usually is still beneficial to save for a house through FHSS due to the tax benefits + investment gains that you'd theoretically receive, the gains will outweigh any additional tax you'd have to pay when withdrawing
I believe the marginal rate at that time would only be applicable to the gains you have earned over contributed super not entire amount cos it becomes double taxation and absolutely no benefit in that case. For instance on 50K super if you have made additional 10k gain over the years marginal tax would apply to 10k not entire 60K. Secondly I think you can only withdraw upto 85% of it for FHSS. An accountant can explain it better further.
@@ahmad-jl6ii thanks for explaining it further, sounds more complicated than I thought. I am currently doing part time, the salary isn’t high enough to reap the benefits of salary sacrifice. And the bank interest rate hike recently too, some offer 4%+, so I think putting money into a high interest saving account would be a better option for now.
Can yoy still SS ( salary sacrifice ) after you pay the tax on each week ( per payslip ) , like can you still do SS in May that you already been tax over 15k , and than bang SS the 10k in May before last week of june ( before financial year ends )
Yes you can. This is essentially just an after-tax contribution, if you intend to claim the tax savings back you'll also need to submit a 'notice of intent to claim form' to your superannuation fund. They'll then provide you with a form that you can use during tax time so you can claim the tax difference back.
@@raymondla just did my 2022-2023 tax return yesterday ( before finding out this ) is if too late to do it ? And I just find out in my MYGOV ATO I have 100k carry forward concession contributions, what’s the best way to contribute the 100k into my super , I mean mixing with salary sacrifice. Will it not be too advisable? Lowering the tax too much not too beneficial? Thanks in advice
Really loved this video, very simple to understand! Just one thing to consider though - when comparing how much tax you pay on something that's salary sacrificed vs tax paid out of your normal taxable income I think this was a bit misrepresented.
In the example of earning $200,000, you compared paying 15% on $5000 vs being taxed at 45%. Realistically no one is paying 45% tax on their income. In this case it would only be their income between $140,000-200,000 taxed at that rate. Someone earning that much would in the end only be paying about 25-26% of their income in tax. So I think comparing that % against the 15% super tax rate would be a more realistic comparison of the tax savings.
Another great video Raymond. I've been salary sacrificing for a year now, $100 a week. It's great because I see my super grow and pay less tax, but the actual difference to my take home pay each week is actually only around $75, not $100 because of how it changes my weekly taxable income.
Glad you enjoyed the video! Couldn't agree more, I sacrifice $500 each fortnight and I only notice around $350 difference in pay.
Still going on ? How much is your super now ?
Great stuff Raymond
Great video!😀 Just important to that the saving in taxes are related to the tax bracket you are in, personally I wouldn't go further that 45k a year as the tax in that case is 19% (just a 4% tax savings). Also, there is something called carry-forward of unused concessional contributions, in where you can utilise the super you didn't use from up to 5 previous financial years. Thus, you can put more money in your super and get the tax benefits.
I totally agree! I'd only recommend salary sacrificing when you're in the tax bracket of 32.5% or higher as that is when the benefits are noticeable. Also good call out on the carry-forward, good tip for people who want to maximise the tax benefits.
Very useful information! Thank you Ray, I love your videos.
Glad you enjoyed the video Uyên!
Loving your video's Raymond. Very informative
Hey Raymond, I love your videos. Is it better to Salary sacrifice in a good Super OR invest in long term EFT like Vanguard?
Good job, I enjoy your videos :)
Thank you very much!
When requesting a withdrawal for fhss purposes is the potential earning you can withdraw based on the super fund performance or is the ato shortfall interest charge rate used?
It would be cool to see a comparison analysis of non concessional contributors and withdraw the after tax component 85%, compared to making a concessional contribution and filing a notice to claim the tax back. If you would then be eligible to withdraw the full contribution amount e.g. $50,000 rather than 85% of?
Thanks for this informative video mate. Just a question: Is the money that comes straight into super after the 15% tax or is it not?
Glad you enjoyed the video mate. Correct, any employer contributions and pre-tax contributions you make will be taxed at 15% up to the concessional cap limit which is currently at $27.5K
Hi Raymond, been watching few of your videos and love all of them. You mentioned at the end of the video that you will be taxed a second time when withdrawing the fund, is this only apply to the FHSS scheme? And since I will be taxed a second time, will it actually be better to just save up the money myself after salary sacrifice? I am currently 19 and not sure to join this or not, definitely want to get my own house in the future tho!
Hey mate glad you are enjoying the content. It's awesome that you are so interested in personal finance at such a young age! Depending on your salary it usually is still beneficial to save for a house through FHSS due to the tax benefits + investment gains that you'd theoretically receive, the gains will outweigh any additional tax you'd have to pay when withdrawing
I believe the marginal rate at that time would only be applicable to the gains you have earned over contributed super not entire amount cos it becomes double taxation and absolutely no benefit in that case. For instance on 50K super if you have made additional 10k gain over the years marginal tax would apply to 10k not entire 60K. Secondly I think you can only withdraw upto 85% of it for FHSS. An accountant can explain it better further.
@@ahmad-jl6ii thanks for explaining it further, sounds more complicated than I thought. I am currently doing part time, the salary isn’t high enough to reap the benefits of salary sacrifice. And the bank interest rate hike recently too, some offer 4%+, so I think putting money into a high interest saving account would be a better option for now.
Hi Raymond I have some questions pertaining buying real estate from a friend and tax strategy. Could we jump on a call?
Did he say I don’t know?
Can yoy still SS ( salary sacrifice ) after you pay the tax on each week ( per payslip ) , like can you still do SS in May that you already been tax over 15k , and than bang SS the 10k in May before last week of june ( before financial year ends )
Yes you can. This is essentially just an after-tax contribution, if you intend to claim the tax savings back you'll also need to submit a 'notice of intent to claim form' to your superannuation fund. They'll then provide you with a form that you can use during tax time so you can claim the tax difference back.
@@raymondla just did my 2022-2023 tax return yesterday ( before finding out this ) is if too late to do it ?
And I just find out in my MYGOV ATO I have 100k carry forward concession contributions, what’s the best way to contribute the 100k into my super , I mean mixing with salary sacrifice. Will it not be too advisable? Lowering the tax too much not too beneficial?
Thanks in advice