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Making Effective Use of Monthly Salary

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‘Salary sacrifice’ is a typical type of financial arrangement which is lawfully signed by an employee and his or her employer; by signing this legal contract, the employee gives his or her consent to give up an agreed portion from the monthly remuneration, on the stipulated condition that the employer will provide equal benefits to them; the benefits can be an agreed pre-fixed item or services. These types of monetary pacts are also commonly termed as ‘SP (Salary Packaging)’ or ‘TRP (Total Remuneration Packaging)’. ‘Salary sacrifice in Australia’ is a well appreciated financial practice which is created in tune with the aforementioned method, and many of the modern day Australian companies, as well as employees have started to accept this type, because of the well defined mutual benefits.


By agreeing to a salary sacrifice scheme, an employee can make certain that he or she is capable of paying for a particular product which they currently need, without directly paying from their own savings or relinquishing some other forms of personal investments. They can manage the payment from their monthly pre-tax salary; an added advantage of this fact is that there won’t be any need to pay tax for this particular amount.

It is a commonly seen fact that as soon as the monthly salary packet comes into the hands of the employees, the strength or value of the packet reduces considerably within some days itself; this is because the day to day expenses are on the rise everywhere, and a whole lot of money is spent on such matters. Then when the investment portion of the salary is kept apart, there won’t have any money left for buying some essential gadgets for house or a new Smartphone or a new motor vehicle. This is a commonly seen scenario everywhere, and innovative schemes like the ‘salary sacrifice arrangements’ are devised to tackle such financial conditions of the employees in a beneficial manner.

One of the compulsory clauses of a salary sacrifice contract will be that the employee will have to give up the agreed amount for the full phase of the contract. It should be understood that if any kind of a typical monetary benefit that is given to the concerned employee, over and above the monthly remuneration, then that is legally calculated as a taxable income. All income of the employee received from the company, prior to the enforcement of salary sacrifice, such as salary or wages, additional benefits like bonus, privileged leave allowances or any kind of extra payments for extra works carried out won’t come under the salary sacrifice agreement.

As a matter of fact there are no constraints or limitations regarding the kind of advantages that can be placed under the provision of salary sacrifice. The key criterion is that the relinquishing amount is a portion of the employee’s own monthly wage package. In general the salary sacrifice can be used for obtaining some highly valuable assets like brands, properties like lands, houses, company shares or diverse kinds of financial bonds. It can be also for settling loan accounts, costs for bringing up children or their study fees etc. The best bet for getting a clear picture regarding ‘salary sacrifice in Australiafollow’, is internet search; there is a plethora of such websites, who specialize in the topic.

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