Volume 49, No. 4, March 23, 2006

SmartSalary is a contractor to Defence for salary packaging services. Members should obtain individual financial advice regarding salary sacrifice and superannuation.

Salary packaging enables you to receive your salary as a combination of cash and benefits. These benefits are paid from your pre-tax salary, reducing your taxable income and the amount of tax you pay.
You are eligible to sacrifice up to 100 per cent of your salary including service allowances and ongoing shift penalties (where applicable) towards eligible benefits.

Superannuation is seen as a tax effective investment strategy that forms the foundation for a long-term savings arrangement to primarily deliver retirement income. By making additional super contributions from pre-tax dollars, you save the income tax you would have normally paid on the contribution amount.

It is important to note that some statutory charges apply when making pre-tax contributions to superannuation. Both the Association of Super Funds of Australia (www.superannuation.asn.au) and The Australian Securities and Investment Commission (www.fido.asic.gov.au) provide free tools to help you calculate the difference a small fortnightly sacrifice can make to the lifestyle you will enjoy in retirement.

Packaging superannuation contributions can be a tax effective option for most members. Additionally, the abolition of the Super Surcharge Tax from July 2005 has made super even more attractive to high income earners.


How does my Super work now?
Each Defence member is allocated to one of the following superannuation funds administered by ComSuper:
 Commonwealth Super Scheme (CSS)
 Public Sector Superannuation Scheme (PSS)
 PSS Accumulation Plan (PSS–AP)
 Military Superannuation Benefits Scheme (MSBS)
 Defence Force Retirement and Death Benefits Scheme (DFRDB)

As a member of one of the above funds, you are required to make after-tax Super contributions at a minimum level of your annual salary, which is determined by the fund rules.

This after-tax contribution is made in addition to your employer’s contributions and most (with the exception of DFRDB) can be increased to a maximum of 10 per cent of your annual salary.

Members of PSS-AP are not required to make after-tax contributions, but are free to do so. Further information on each of
these schemes can be found online at www.comsuper.gov.au or by calling 1300 000 177.

Does my ComSuper fund accept pre-tax contributions?
 MSBS and PSS-AP – Yes. These funds accept contributions from current contributing members.
 CSS and PSS – No.
 DFRDB – No. Current contributing DFRDB members are entitled to make contributions into an MSBS account. Please contact ComSuper for further information.

You cannot salary package into your spouse’s Super.

What happens if my ComSuper fund doesn’t accept pre-tax contributions?
All members can contribute to any eligible Superannuation Fund or Retirement Savings Account (RSA) outside those administered by ComSuper. This is common and accepted practice and means you will be maintaining two separate funds for retirement.

At any stage in the future you can consider consolidating funds (where accepted by the fund) or you may elect to receive an income from each fund at retirement.

This strategy should be reviewed by a financial planner.

How much do I contribute and which fund should I select?
You should research the available options and select a fund and contribution amount which will work for you. The SmartSalary savings calculator can assist when estimating tax savings and the effect of salary packaging on your take home pay.

Financial advice is recommended and can be arranged at a government price of $150+GST. Financial advice fees can be salary packaged through SmartSalary.

What should I do now?
1. Read the SmartSalary Handbook and Superannuation benefit profile carefully.
2. Investigate and apply for membership of a fund if required.
3. Decide how much to contribute and consult with your financial advisor if appropriate.
4. Submit your SmartSalary Application Form and Superannuation Claim Form
5. You will be sent a SmartSalary Confirmation Report reflecting the set up of your salary packaging account.

You should check this report carefully and advise us if any changes are required.

Whenever making important decisions that affect your income and financial affairs, you should always consider seeking financial advice. SmartSalary strongly encourages you to use the service of a professional financial advisor before entering into a salary packaging agreement.

Please visit us online at www.smartsalary.com.au (Employer Code=Defence) for further information including forms, detailed benefit information, fees, savings calculator and listed financial advisors. You can also email us at defence@smartsalary.com.au or call 1800 632 496, between 8:30am and 5:30pm, Monday to Friday.