Can you confirm the following can/cannot be salary sacrificed?
Annual leave, LSL? No as per TR2001/10
ETP's? No, as they are not considered Salary and wages
Redundancy? No, as they are not considered Salary and wages
In lieu of notice I know is an ETP when paid out on termination however your OTE listing states that it is salary and wages, so does this mean this ETP can be salary sacrificed?
Hi @louisem
What you need to look at, is if the arrangement is an effective one. To be effective, an arrangement needs to be entered into before any relevant leave entitlements, salary and wages etc start accruing. This includes an allowable portion of an ETP (in lieu of notice) for future earnings. Redundancy can't be sacrificed since it doesn't accrue and not salary and wages. So, if any leave and LSL has already started accruing then it can't be salary sacrificed.
Hi @louisem
What you need to look at, is if the arrangement is an effective one. To be effective, an arrangement needs to be entered into before any relevant leave entitlements, salary and wages etc start accruing. This includes an allowable portion of an ETP (in lieu of notice) for future earnings. Redundancy can't be sacrificed since it doesn't accrue and not salary and wages. So, if any leave and LSL has already started accruing then it can't be salary sacrificed.
@AriATO Thank you. I thought ETP's can not be salary sacrificed at all.
Redundancy pay and ETPs are not deemed ‘salary and wages’ for the purpose of salary sacrifice. The fact that they NOT mentioned in the Salary Sacrifice Ruling is sufficient to say they cannot be sacrificed.
Employees have not been able to roll-over ETPs since 2012.
'You can't roll over your ETP to your superannuation.'
Hi @louisem
We answered a similar question about this before. Have a look at Salary sacrificing on termination. What you're saying is interesting and makes sense. We'll do some more research and let you know.
Hi @louisem
We've confirmed with our technical team that payments in lieu of notice are OTE and therefore salary and wages as per paragraph 38 of SGR 2009/2. Therefore, to the extent that an ETP consists of a payment in lieu of notice, this amount would be able to be salary sacrificed so long as the salary sacrifice agreement is made before the in lieu time commences. Redundancy payments can't be sacrificed.
Its important to let employees know that when you set up Salary sacrifice arrangements you'll need to advise them, it'll be for future earnings and accrued leave attributed to those future earnings, not past.
If you'd like further info you're welcome to write into us for advice.
@AriATO thank you. What if the employer is paying out the in lieu of notice as an ETP. WIll they still be able to salary sacrifice.
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