Benefits of a Salary Sacrifice Home Loan

2010 April 15
by iggy

Sacrificing your salary is not easy.  Often you have to cut down on your personal expenses when you opt for a salary sacrifice. But what exactly is a “salary sacrifice”?  The term sacrifice does not often connote something good.  However, when used properly such a sacrifice can have beneficial effects.

There are a number of ways to use it, and it is often as a tax shield.  One way to do this is through superannuation.  Superannuation means that you are contributing to a certain fund, such as a retirement fund, and this fund is taxed by the government at a lower rate than usual.  This means less taxes to pay, and more money in the bank when you retire.  This is good especially if you plan on living on interest when you retire, the bigger the amount of superannuation, the more likely that you can actually afford to live on interest.

Another way to use the sacrifice to one’s advantage is to have it considered as a fringe benefit.  This means if you sacrifice a portion of your salary, you could use it in exchange for the use of a car, or in exchange for repayments to a home loan with the employer directly making your repayments for you, without the money going through your pockets.

This means that the banks and lenders are assured of your payments as long as you hold your job with your employer and are making enough salary to pay the loan.  Furthermore, you are taxed less as the direct payments made by your employer to the lender is not considered as income, and you can get a tax break.  This means that you are making your salary sacrifice home loan work for you, and you are avoiding taxes in a legal way while at the same time making repayments to your home loan.  All these benefits should be encouraging when you decide whether or not to make a salary sacrifice.

2 Responses leave one →
  1. October 4, 2014

    That iss a great tip especially to those fresh to the blogosphere.
    Simple but very precise information… Appreciate your sharing this one.
    A must read post!

  2. November 22, 2014

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    Root holds the target in place until the enchantment ends. It
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