Newspaper article Coffs Coast Advocate (Coffs Harbour, Australia)

Salary Sacrificing to Increase Super

Newspaper article Coffs Coast Advocate (Coffs Harbour, Australia)

Salary Sacrificing to Increase Super

Article excerpt

NEST EGG

SHANE GOURLEY

A SALARY sacrifice arrangement is an arrangement under which an employee agrees to forego part of his or her total remuneration that he or she would otherwise expect to receive as salary or wages, in return for the employer providing benefits of a similar value.

The main assumption made by the parties is that the employee is then taxed under the income tax laws only on the reduced salary or wages and that the employer is liable to pay fringe benefit tax, where applicable, on the benefits provided.

Salary sacrifice presumes the existence of an employment relationship. Fringe benefit tax is not payable on superannuation contributions that are made for the purpose of the employee.

With regard to salary sacrificing into superannuation, the salary sacrifice arrangement involves an employee agreeing to reduce part of his or her gross income in return for which the employer makes a contribution to a superannuation fund on the employee's behalf. …

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