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  • Salary sacrifice arrangements

    Under a salary sacrifice arrangement, an employee may agree to forgo part of their future entitlement to salary or wages in return for benefits of a similar value.

    With a salary sacrifice arrangement in place:

    • the employer may be liable to pay FBT on the fringe benefits provided
    • the employee pays income tax on the reduced salary or wages
    • superannuation contributions paid in lieu of forgone benefits are classified as employer contributions (rather than employee contributions) and are taxed in the superannuation fund.

    See also:

      Last modified: 26 Jun 2020QC 16948