“Salary sacrifice” is jargon for a strategy whereby an employer and employee agree prospectively that an employee's salary will be reduced by an equivalent amount of deductible superannuation contributions paid by the employer to an agreed superannuation fund.

The employee is better off on an after tax basis because the tax paid on the sacrificed salary is greater than the tax paid on the superannuation contributions.

Salary sacrifice strategies are generally accepted by the Australian Taxation Office provided the sacrifice is made on a prospective basis and does not relate to existing salary entitlements for work actually completed.