• Salary sacrificing super – information for employers

    An employee can 'sacrifice' part of their salary or wages into super contributions under an agreement with you. You then pay the sacrificed amount to your employee's super fund on their behalf.

    There may be benefits to both of you.

    • For your employee, salary sacrificing is a tax effective way of increasing their super, provided they stay within their contribution caps.
    • For you, salary-sacrificed super contributions count towards your super guarantee payment obligations, which are calculated on your employee's reduced salary. However, the agreement may specify that you continue to pay super at the pre-sacrifice level.
    • The contributions are deductible.
    • Salary-sacrificed super contributions aren't subject to fringe benefits tax.

    To get these benefits, the contributions must be made under an 'effective salary sacrifice arrangement' to a complying super fund.

    Salary sacrifice contributions you make for an employee must be included on their annual payment summary as reportable employer super contributions.

    You don't have to offer or agree to salary sacrifice arrangements with your employees. You may wish to speak to a tax adviser about the implications for your business.

    Note: From 1 July 2017 the 10% maximum earnings test will be abolished from the personal superannuation contributions deductions eligibility criteria. This means you may see an increase in employees opting out of their salary sacrifice agreements. If your employees opt-out, you must ensure you pay the required superannuation guarantee entitlements.

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      Last modified: 06 Feb 2017QC 17235