Issue
Can the employee's existing salary sacrifice agreement apply to the workers compensation payments now received in lieu of wages?
Decision
Yes. The employee's existing salary sacrifice agreement can apply to the workers compensation payments now received in lieu of wages.
Facts
The employee entered into a salary sacrifice arrangement with the employer. Under this arrangement, the taxpayer sacrificed 10% of their gross wages directly into a superannuation fund. The salary sacrifice arrangement is considered to be validly made for the purposes of Superannuation Guarantee Determination SGD 98/2, such that the superannuation contribution is made by the employer, and the reduced salary is the amount the employee includes as assessable income for income tax purposes.
The employee was injured in a motor vehicle accident.
The employer's insurers are treating the accident as a workers compensation claim and are reimbursing the employer for the wage payments now being made to the employee.
Reasons for Decision
An employer and employee will need to refer to any written salary sacrifice agreement in determining whether the salary sacrifice can continue while the worker is receiving compensation payments. In the absence of any restrictions, the employer and employee can agree for the salary sacrifice agreement to continue in relation to the workers compensation payments.