Salary sacrifice

Your employees may choose to enter into a salary sacrifice arrangement with you to make additional contributions to their super from their pre-tax income. The employee sacrifices a portion of their pre-tax salary which you then pay directly into their super account.

If a salary sacrifice agreement is in writing, you can claim a tax deduction for the contribution.

Try our sample agreement as a guide.

Important issues

Non-wage remuneration is included in income tests used to determine eligibility for a range of government financial assistance programs, including family tax benefits and some Centrelink benefits.

Salary sacrifice superannuation contributions are included as income for income-testing purposes. This can affect your employees’ eligibility for the:

  • Federal Government Co-contribution
  • Spouse contributions rebate
  • Self-employed tax deduction

However, the sacrificed component is excluded from the definition of assessable income that is used to determine the employee's PAYG tax liability.

RESCs

The salary sacrifice contributions included as income for the various income tests are called ‘Reportable Employer Superannuation Contributions' (RESCs). Employers are required to report their RESCs in pay-as-you-go (PAYG) annual withholding reports and in employees' PAYG payment summaries.