Payroll Concepts > Salary Sacrifice

A salary sacrifice is an arrangement between you and your employee which enables your employee to pay for certain goods or services straight from their pre-tax salary. The effect is to reduce an employee’s taxable income and subsequently their tax liability.

For a salary sacrifice to be permissible, both you and the employee need to be in agreement. Bike to work and travel passes are the two most common uses of a salary sacrifice. More information about each of these is available here:

Payroll Concepts > Bike to Work

Payroll Concepts > Travel Passes

To set up a salary sacrifice on SimplePay, you need to create a custom income item with a negative value. More information about creating custom items is available in this article:

Payroll Setup > Company Setup > Custom Items

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