salary sacrifice for employees



Have any of your employees asked you to add more to their super before tax? They might have heard about its benefits from us.

Every year, we remind our members they can boost their super by making extra before-tax or after-tax contributions. So in the lead up to 30 June, you might have a few requests rolling in.

Before-tax contributions can be a great option for people to boost their super and save on tax.

Here’s what you need to know about before-tax, or ‘salary sacrifice’, super contributions.


How do before-tax contributions work?

Your employee can redirect, or 'sacrifice', part of their before-tax salary or wages into super contributions, if you agree to it. You then pay the sacrificed amount to your employee's super fund on their behalf.


Why agree to salary sacrifice?

It can be a win-win for both of you, as long as the contributions are made under an 'effective salary sacrifice arrangement' to a complying super fund.


For your employee    

  • Salary sacrifice allows people to boost their super while reducing their taxable income.
  • It’s a tax-effective way for people to save more for their future, as long as they stay within their contribution caps.
  • Salary-sacrificed super contributions don’t attract the fringe benefits tax.

For you    

  • If you offer salary packaging, your employees’ thresholds, limits and benefits are not affected by salary sacrifice. They can work together to produce maximum tax benefits.
  • Salary sacrifice is another benefit you can offer to help attract and retain employees. It gives them flexibility in how they can plan for their future.
  • The salary sacrificed contributions are tax deductible.


Quick tips

  • It’s a good idea for you and your employee to clearly set out and agree on all the terms of the salary sacrifice arrangement. Check with the Fair Work Commission before you sign off on an agreement.
  • Salary sacrifice contributions you make for an employee must be included on their annual payment summary as reportable employer super contributions.
  • If you decline a salary sacrifice request, your employee can make a personal contribution and later claim a personal tax deduction (subject to eligibility and caps).  This can ease your admin burden and give you peace of mind that your employees have another option to save on tax.


What to do next

  1. Think about speaking to a tax adviser to understand how employee salary sacrifice can work for your business.
  2. Visit the ATO’s website for more about employee salary sacrifice.



making super easier is our business

As a HESTA employer, you have help on tap to make super work for you and your employees.

you might also like

Federal Budget 2024-25

With inflation and currently high interest rates continuing to hit household budgets, this year’s Federal Budget contained some important changes for super.

Read more

We're here to help

Need some advice about your super, insurance, or investments? Make an appointment to speak to a HESTA adviser and someone from the team will get in touch with you.