Enter into the arrangement before you perform the work
To be an effective salary sacrifice arrangement, the arrangement must be for your future earnings rather than any salary, wages or entitlements you have already earned. For example, an effective salary sacrifice arrangement cannot include annual or long service leave you have accrued before entering into the arrangement.
Make an agreement between you and your employer
We recommend that you and your employer clearly state and agree on all the terms of the salary sacrifice arrangement. If you enter into an undocumented salary sacrifice arrangement, you may have difficulty establishing the facts of your agreement.
Depending on the terms of any contract of employment or industrial agreement, employees can renegotiate a salary sacrifice arrangement at any time. Where a renewable contract exists, you and your employer can renegotiate amounts of salary or wages to be sacrificed before the start of each renewal.
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If you sacrifice all your salary or wages to super you may not be entitled to a super co-contribution.
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Permanently forego sacrificed salary
The sacrificed salary must be permanently foregone for the period of the arrangement. For example, if a salary sacrificed super contribution is not made and instead cashed out at the end of a salary sacrifice arrangement accounting period, the amount cashed out is salary and is taxed at PAYG withholding rates.
When salary is sacrificed into super, the contributions are preserved in the fund or retirement savings account and you cannot access them until you satisfy a condition of release such as attaining age 65.
Last Modified: Tuesday, 27 July 2010