Setting Up Salary Sacrifice

Salary sacrifice distributes before-tax income to a superannuation fund. This reduces the tax on an employee's pay.

You must:

• Set up an authority for the business that the salary is being sacrificed to.
• Set up a deduction transaction type with the above authority making sure, on the Configuration tab, that the taxable accumulator (or equivalent) is selected.
• Select the above deduction transaction type for the employee who is salary sacrificing on the Employee Maintenance form.
• On the Pay tab on the Employee Maintenance form, ensure that the ordinary time is the pre-sacrifice gross. This ensures all overtime and leave calculations are based on the correct value.

When a pay is processed, the sacrifice amount is automatically deducted before tax. At the end of a period, you can report on the sacrificed amount and remit it to the authority.

Note: Ensure that the deduction is included in gross and included on the Reportable Super tab for the payment summary configuration. Doing that reduces the reportable taxable income and correctly reporting to the ATO.