Salary sacrifice¶

Definition. Salary sacrifice is an arrangement, agreed in advance and in writing, where an employee gives up part of their before-tax pay in return for a benefit (commonly extra super), which reduces the pay they are taxed on.

In plain English¶

The employee agrees, in writing and before doing the work, to swap some of their before-tax pay for a benefit such as extra super. Because that pay is set aside before tax, they are taxed on a smaller amount.

Related lessons¶

• Salary sacrifice

General information only — not tax, super or financial advice.