While creating our salary sacrifice modelling tool, I was reminded of an issue that I don’t think receives the attention it should.

When sacrificing salary, it’s important to consider the SG contributions that the employer is making. If these fall in line with the salary sacrificed the employee benefit is significantly reduced.

SG integrity measures have applied since 1 January 2020. These dictate that, in a genuine salary sacrifice arrangement, the sacrificed amounts cannot be applied to satisfy the employer’s SG obligation, and SG must still be calculated on the pre-sacrifice ordinary time earnings base. So, structured correctly, the client’s employer contributions don’t move.

It leaves me to wonder if anyone bothers to check. I presume it’s easier for an employer’s payroll system to simply calculate the SG on the new salary amount so it wouldn’t surprise me if this occurs more often than we might think.

The introduction of payday super is an opportunity for employees to confirm that their salary arrangements have been implemented correctly. Our salary sacrifice report, available to our Alliance Partners, calculates the consequential effect of SG lost.

Note, however, that the SG integrity measures don’t always apply. They do not cover a genuine renegotiation of salary where the change is implemented as a contractual reduction in actual salary and is really a package reallocation. In this case the SG base lawfully falls with it.