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  • Salary sacrifice arrangements

    A salary sacrifice arrangement is an arrangement between you and your employee, where your employee agrees to forgo part of their future entitlement (such as salary or wages) in return for you providing benefits of a similar cost.

    Under an effective salary sacrifice arrangement:

    • your employee pays income tax on the reduced salary or wages
    • you may be liable to pay fringe benefits tax (FBT) on the fringe benefits provided
    • if the arrangement involves receiving super contributions in lieu of salaries or wages, these contributions are classified as employer super contributions (rather than employee contributions) and are taxed in the super fund.

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    Last modified: 23 Jan 2015QC 43872