“These can include a super guarantee or any other contributions the employer may need or choose to make for a particular employee, such as additional contributions made under an employment agreement or industrial award, or contributions an employer chooses to make to cover the cost of life insurance health through super,” he said.

Sanderson said with these in mind, salary sacrificing may not be a worthwhile strategy for a high-income client as they may use up most, if not all, of their concessional contributions.

“For example, if a client had ordinary-time earnings of at least $65,070, each quarter of the 2024-25 year, the maximum super guarantee contributions base is about $260-280,000 over the year, and their SG contributions are going be $29,932. Given a $30,000 cap, it does not leave much scope at all to do any salary sacrificing,” he said.

“But we also need to take into account a client's eligibility to use catch-up concessional contribution rules. So, if their total super balance was below $500,000 at 30 June of the previous financial year, and they have unused concessional cap amounts from any of the five previous financial years, then they could potentially salary sacrifice amounts up and over that general concessional cap of $30,000.”

However, he said that clients' salary sacrifices over the general concessional cap need to be monitored closely and a review of the total super balance should be undertaken at the start of each financial year to ensure that they are going to be able to continue to be eligible to use the catch-up concessional contribution rules.

“If they bounce up over that $500,000 mark, they are then limited to the general $30,000 conditional contribution and even then, assuming their TSB is still below $500,000, you may also need to check how much remaining unused cap amount they have the left to determine what their actual concessional contribution cap is for that year, and whether they need to vary their salary sacrifice levels to avoid going over that,” he said.

Sanderson continued that advisers should also consider the change to the effective tax-free thresholds from 1 July due to the stage 3 tax cuts, reducing the 19 per cent marginal tax rate to 16 per cent.

“For example, if we look at someone who would be eligible for the low-income tax offset, and no other tax offsets, they will be able to earn more before they need to start paying tax due to the lower tax rate,” he said.

“The effective tax-free threshold for people eligible for low-income tax offset increased from $21,884 to $22,575 and for people eligible for both low-income tax offset and seniors and pensioners tax offset (SAPTO), the thresholds increased from $33,088 to $35,813 for single rules and from $29,783 to $31,888 for each member of a couple.”

He added another area of consideration for advisers to think about regarding the effective tax-free threshold is whether they recommend a salary sacrifice arrangement as part of a transition to retirement strategy to maximise retirement benefits.

“In this case, clients can also potentially afford to salary sacrifice significant amounts of their income to super because they're going to be replacing that lost income with tax-free TTR pension payments,” he said.

“For those types of clients, you want to limit salary sacrifice levels to avoid reducing their taxable income down below that effective tax-free threshold, even if the concessional cap would allow them to avoid paying contributions tax on salary sacrifice amounts that wouldn't have been taxed.”