Salary Sacrifice Agreement Form

The following work points, which are usually included in wage benefit agreements, are exempt benefits: Note: While we give details on the calculation of the ancillary benefit tax (FBT), we do not give financial advice on accepting or refusing a package. You should seek financial advice before entering into a wage sacrifice agreement. A salary victim implies that an employee wishes to waive a right to part of his salary in cash in exchange for a defined benefit in kind. The salary agreement letter (call for the current salary reduction) consists of two parts. The first part is the confirmation of the employer`s agreement with the worker, which also sets out the terms of the agreement, and the second part is the worker`s application form to the employer, which confirms his agreement to the wage sacrifice agreement (sometimes called an optional remuneration agreement). If your employer covers an expense as part of your salary envelope, for which you would normally be entitled to a tax deduction, they do not have to pay FBT for these expenses. This is called the “otherwise deductible rule.” In this case, you cannot claim an income tax deduction for this expense on your personal income tax return. This is due to the fact that the “deductible element” of expenses has been taken into account when your employer calculates the taxable value of the benefit granted to you for FBT purposes. However, employers should always check with their system provider to find out if such agreements are admissible. Other allowances are possible. Note: This example illustrates how wage sacrifice agreements can work. This is not legal or professional advice.

They should not act solely on the basis of the information contained in this example. Specific advice should always be sought from your financial advisor. In the absence of an occupational pension plan, it is possible that a worker received a lower income under the wage sacrifice agreement. A wage sacrifice agreement must not lower an employee`s cash income below national minimum wage rates (NMW). Employers must put in place procedures to limit the deduction of wage victims and maintain NMW rates. On the childcare Choices website, staff members will find more information to support childcare costs. Super-contributions sacrificed as part of an effective agreement on employee victims are considered employer contributions. These are not ancillary benefits if they are paid for an employee to a compliant superfund.

Before January 1, 2020, your employer could use the sacrificed super-contributions to reduce both the amount of salary on which your entitlement to the superguarantee is calculated and the payment of all or part of its mandatory superguarantee contributions for you. This only applies to specific agreements with an employee, not your overall wage sacrifice policy. It is true that a wage sacrifice agreement is also generally referred to as salary packaging or total compensation packaging. It is an agreement between an employer and an employee in which the employee undertakes to renounce part of his future right to wages or wages. This is consideration for the employer to offer them benefits of similar value. It may be necessary to change the terms of a wage sacrifice agreement if a lifestyle change significantly alters an employee`s financial circumstances.. . . .