As the calendar ticks over to the next financial year, this may be an opportune time to update your salary sacrifice agreement. A salary sacrifice agreement is an agreement made on a prospective basis between yourself and your employer to make additional superannuation contributions from your wages.  From a cash flow perspective, structuring these agreements at the beginning of the financial year helps you to maximise your contributions without impinging on your day to day lifestyle needs.

When deciding on the level of salary sacrifice you should consider your contribution caps. For someone who will be at least 50 by the 30th June 2016, the contribution cap is $35,000. For everyone else the cap is $30,000.

Included in this cap are your Superannuation Guarantee contributions. For the financial year 2016 the SG rate is 9.5% of your ordinary income. For example, if you are under 50 and your base wage is $100,000, your employer contribution will be $9,500, and the maximum salary sacrifice contribution can be $20,500.