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6.3.26 How to Treat Salary Sacrifice
Salary amounts which employees sacrifice in favour of other non-cash fringe benefits, such as additional superannuation, vehicles, and other conditions, are not exempt from assessment as AE. In some instances, such as with superannuation, the sacrificed amounts are deferred and may not be received for several years. Nevertheless, as they are earned and derived from the person's employment, they are assessed as income at the time they are earned.
The gross amount of salary should be used as actual earnings. This is the amount prior to any salary sacrifice deductions. For example, John earns $2,654.00 per fortnight gross however he pays $300.00 per fortnight into a private superannuation fund. His taxable income is $2,354.00 however, we would consider the gross amount of $2,654.00 as his actual earnings.