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wmakara(Initiate)Initiate
10 Nov 2021

I have an employee who has resigned and has requested their unused long service leave be paid as a salary sacrifice to their super fund on termination. Can this be done? Or does the unused LSL get paid to the employee and it's up to them to then pay into their super fund. Thanks for your assistance.

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1,180 views
1 replies

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Most helpful replyATO Certified Response

BlakeATO(Community Support)Community Support
ATO Certified Response12 Nov 2021

Hi @wmakara


A salary sacrifice arrangement must have been in place before the entitlements were earned. For long service leave, that is the date the long service leave began accruing. If the employee hasn't taken any LSL since starting employment, then that date is the first day of employment.


For this employee, it means they cannot request their LSL be salary sacrificed.


You may want to let the employee know as an alternative option, they can make a personal super contribution then give their super fund a notice of intent to claim a deduction. The fund will send a letter of acknowledgment and they can claim the super deduction on their tax return.


You can read about effective salary sacrifice arrangements and super deductions on our website.

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Most helpful replyATO Certified Response

BlakeATO(Community Support)Community Support
ATO Certified Response12 Nov 2021

Hi @wmakara


A salary sacrifice arrangement must have been in place before the entitlements were earned. For long service leave, that is the date the long service leave began accruing. If the employee hasn't taken any LSL since starting employment, then that date is the first day of employment.


For this employee, it means they cannot request their LSL be salary sacrificed.


You may want to let the employee know as an alternative option, they can make a personal super contribution then give their super fund a notice of intent to claim a deduction. The fund will send a letter of acknowledgment and they can claim the super deduction on their tax return.


You can read about effective salary sacrifice arrangements and super deductions on our website.

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Can unused long service leave be salary sacrified to super on termination | ATO Community