Salary Sacrifice Arrangements: Who Qualifies and What You Get
Learn how salary sacrifice works to reduce your taxable income by directing pre-tax earnings toward superannuation or other benefits.
Salary sacrifice is a way to reduce your taxable income by choosing to receive part of your pay as a non-cash benefit instead of regular wages.
Who it's for
This arrangement is for employees who are negotiating their pay packages and wish to allocate funds toward specific benefits.
What you get
By participating, you can direct a portion of your pre-tax salary into your superannuation or toward other specific benefits. This process can help reduce your overall taxable income.
What it costs you
To use this method, you must reach a formal agreement with your employer to change how your pay is distributed.
The catch to know
If the amounts are not calculated correctly, this can significantly reduce your actual take-home pay. It is important to understand how much cash you will have left for your daily expenses before committing.
How to apply
- Discuss potential salary sacrifice options with your employer.
- Negotiate the specific benefits or superannuation contributions you want.
- Confirm the impact on your take-home pay with a financial professional or through your pay stub.
- Ensure a formal agreement is signed between you and your employer.