FAQ Salary Sacrifice

How do I establish a superannuation salary sacrifice for an employee?

It is very straightforward to set up a salary sacrifice for any employee. A salary sacrifice requires attention to the pay item group used to calculate the SGL amount

Step 1 – Create a pay item for the superannuation salary sacrifice.

In this example our employee earns $703.00 a week and wants to salary sacrifice $100. We create the pay item.

The amount is a negative number (being deducted from the employees pay) and is taxed when paid (it must be included in the tax calculation and being a negative amount will reduce the tax the employee pays).

Note that the payment summary category in this case is Gross/Reportable as it is reportable on the payment summary. It will also be included in the employee gross income (as a negative amount) thus reducing the total gross income on the payment summary.

An important decision is whether to include the pay item in the pay item group used to calculate the SGL. If not included PayTek will calculate the SGL on the employees “gross pay” (in our example $703.00). If you include it then PayTek will calculate the SGL on the net amount (in our example $603.00)

Step 2 Add this pay item to the employee superannuation reporting

Enter the superannuation pay item into the employees superannuation information. This will add the amounts deducted to the superannuation fund remittance and the employee superannuation report.

Note if the salary sacrifice is paid to a fund different to the SGL fund you should not enter the pay item here. In this case you must print a pay item report whenever you remit the funds to the superannuation fund.

Step 3 Deduct the salary sacrifice from the employee pay

Each time you pay the employee you should deduct the salary sacrifice from their pay. Note that this reduces their gross taxable pay and will also reduce the gross taxable income on their payment summary by the amount of the sacrifice. (Add the pay item to the employee’s standard pay)

Step 4 Ensure that the superannuation pay item group is setup correctly.

The pay items included in this group determine how the SGL is calculated for any fund using this pay item group.

Step 5 Check the superannuation report after finalising the payrun.


The report shows that the SGL is calculated on the employees gross wages (pay item ORD) and the salary sacrifice appears as an additional contribution on the report (and is noted as a salary sacrifice on the SGL remittance).

Note: If an employee wishes to make an employee contribution to their superannuation the procedure is the similar. The pay item used will NOT be taxed when paid and will NOT be shown on the payment summary.

The employee contribution pay item would not be included in the superannuation pay item group and would be entered into the employee contribution pay item in employee setup.

Disclaimer: This information is of a generic nature intended to assist in the use of the software. For specific advice regarding your particular circumstances please seek assistance from your Accountant, the Australian Taxation Office or your IT Consultant as appropriate.