Salary sacrificing contributions by employees are taxed at the employee' s marginal tax rate. True False

Analyzing the Statement

1. Understanding Salary Sacrificing

   • Salary sacrificing is an arrangement where an employee agrees to forgo part of their salary in exchange for benefits, such as additional retirement contributions.

2. Tax Implications

   • The amount that is sacrificed (for example, contributed to superannuation) is typically taxed at a different rate than the employee's marginal tax rate, specifically at a lower concessional tax rate in many jurisdictions.

3. Evaluating the Statement

   • The statement claims that salary sacrificing contributions are taxed at the employee's marginal tax rate. This is generally not correct as they are taxed at the concessional tax rate instead.

Conclusion

Given the above analysis, the answer to the statement is False. Salary sacrificing contributions are not taxed at the employee's marginal tax rate; they are typically taxed at a reduced rate when contributed to superannuation or similar benefits.