The Active Home Loan Manager

Can I salary sacrifice my mortgage?

An arrangement between you and your employer, where you pay for some items or services straight from your pre-tax income, salary sacrificing can lead to great savings.

When you hear the word ‘sacrifice’, apart from getting the eponymous Elton John song stuck in your head, you probably think of giving something up, which can make you feel sad.

But in the context of salary sacrificing – also known as salary packaging – to sacrifice is to rejoice. An arrangement between you and your employer, where you pay for some items or services straight from your pre-tax income, salary sacrificing can lead to great savings. Purchasing a car or computer, paying for childcare, or contributing money to super and your home loan pre-tax, for example, are all examples of salary sacrificing.

It can essentially reduce your taxable income and put more money in your pocket.

How does the salary sacrifice scheme work? Do companies have to offer it?

Most non-government organisations (NGOs) and charities allow their employees to salary sacrifice, as well as some businesses. In many cases, employers will offer salary sacrifice into super, but may restrict the packaging of other benefits.

To find out whether you are eligible for salary sacrificing, you first need to ask your employer. You can also check your entitlements under the Fair Work Act 2009.

Can mortgage payments be salary sacrificed?

Yes they can, but not all organisations offer the option. It’s best to ask your company what it offers and bear in mind that salary sacrificing your mortgage is only available for owner-occupied homes.

Lenders will differ in how they enable you to salary sacrifice but most will allow it. To find out more about how different lenders enable you to salary sacrifice, speak to one of our online mortgage brokers.

How much are you allowed to salary sacrifice?

If there are no limitations specified in the terms of your employment, there is no limit to the amount you can salary sacrifice. However, according to the ATO, you should also consider whether the:  

  • additional salary you wish to sacrifice will cause you to exceed your concessional (before-tax) contributions cap and attract additional tax – this cap limits the amounts that can be contributed to your super fund and still receive the concessional tax rate of 15%;
  • salary amount you sacrifice will attract Division 293 tax – this occurs when you have an income and concessional super contributions of more than
    • $300,000 in one year, before 1 July 2017
    • $250,000 in one year, from 1 July 2017.

For tailored financial advice, it’s a good idea to speak to an accountant or financial adviser.  

What to do next

This information is general in nature, and you should always seek professional advice when making financial decisions.

This information in this article is general only and does not take into account your individual circumstances. It should not be relied upon to make any financial decisions. uno can’t make a recommendation until we complete an assessment of your requirements and objectives and your financial position. Interest rates, and other product information included in this article, are subject to change at any time at the complete discretion of each lender.

Add a Comment

Alexi Neocleous

With over 20 years experience, Alexi has written extensively a wide cross section of financial topics. These topics range from financial planning, mortgages, property commentary and all points in between.

Blog

You might also be interested in

uno, we’re here to help in difficult times

uno’s first priority is to help home loan customers through the COVID-19 crisis and support you to manage your home loan effectively. That means we’re keeping you informed and up to date on the latest information, advice and help available so you can make informed decisions.  Financial resilience is more important than ever right now

Guide to Australian banks’ emergency COVID-19 relief packages

A number of home loan lenders have announced financial relief packages to assist those affected by COVID-19. We have compiled a list of lenders, contact numbers and links to their websites to help you get in touch quickly and get the support you need. Below is a list of some of the key home loan

A message from our CEO, Anthony Justice

At uno, we are monitoring the impact of the COVID-19 outbreak and our top priority is the health of our people, customers and their families.   As a digital-first company, our business model is well suited for working remotely as we are set up to handle the home loan application process online and on the

Search.
Compare.
Settle.
Strut.

Get started

Analyse my home loan

Analyse