How salary sacrifice flights affect your pay and the salary index

What are salary sacrifice flights?

Salary sacrifice flights are an arrangement where you agree to give up part of your pre-tax salary in exchange for your employer providing flights. These flights might be for personal travel, work-related travel, or a mix. The idea is that you pay less income tax on the sacrificed amount, and the employer may also save on payroll tax. However, the flights themselves can be subject to fringe benefits tax (FBT), which the employer may pass on to you.

In Australia, salary sacrifice is common in industries like mining, where fly-in fly-out (FIFO) workers often have flights provided as part of their package. It can also be used for annual leave travel or remote area relocation. The key is that the arrangement must be voluntary and agreed in writing.

How salary sacrifice flights interact with awards and the national minimum wage

Australia’s workplace laws set a hard floor on how much cash you must receive. The national minimum wage from 1 July 2026 is $26.44 per hour, or $1004.90 per week, which gives an annualised figure of $52,255 and a salary index of 48.2. Modern awards often set higher minimum rates. For example, the retail trade award has a minimum rate that is higher than the national minimum wage for many classifications.

When you salary sacrifice flights, your cash wage cannot drop below the minimum set by your award or the national minimum wage. If your base salary is $80,000 and you sacrifice $10,000 for flights, your cash pay becomes $70,000. That must still be above the award minimum for your role. If the award minimum is $65,000, you’re fine. If it’s $75,000, you cannot sacrifice that much because your cash would fall below the floor.

This is a critical point: salary sacrifice does not let you bypass award protections. The pay guides from Fair Work Ombudsman show the exact minimum cash rates for each classification. Always check your award before entering a salary sacrifice agreement.

Where does salary sacrifice flights sit on the salary index?

The salary index is based on gross ordinary-time cash earnings – the money you actually receive in your bank account before tax. It does not include the value of fringe benefits like flights. So if you salary sacrifice flights, your cash earnings are lower than your total remuneration, and your index will be lower as a result.

For context, the national line is 100, which equals $108,352 per year (based on ABS Average Weekly Earnings, May 2026). If you earn $120,000 in total but sacrifice $20,000 for flights, your cash earnings are $100,000. That gives an index of about 92.3 – below the national average. But your total package is above average. The index only measures cash, so it’s a conservative view of your pay.

Different industries have different typical index values. For example, Mining has an index of 154.7, meaning the average cash earnings are well above the national line. Many mining workers use salary sacrifice flights, which lowers their cash index but still leaves them above 100. In contrast, Accommodation and food services has an index of 72.5, so sacrificing flights there could push cash earnings even lower.

Tax and super considerations

Salary sacrifice flights reduce your taxable income, which can save you money on income tax. For the 2026–27 year, resident tax rates start at nil up to $18,200, then 15% up to $45,000, 30% up to $135,000, 37% up to $190,000, and 45% above that. Plus a 2% Medicare levy. By sacrificing part of your salary, you may drop into a lower tax bracket.

However, superannuation is calculated on your ordinary-time earnings. If your salary sacrifice reduces your cash earnings, your employer may pay less super unless you negotiate otherwise. The super guarantee is 12% from 1 July 2026, so a $10,000 sacrifice could mean $1,200 less super per year. Some awards or agreements require super to be calculated on pre-sacrifice earnings – check your pay guides.

Also, the flights themselves may attract FBT. The employer pays FBT at 47%, but they can pass that cost back to you by reducing your salary further. Some flights are exempt, such as those for remote area travel under certain conditions. It’s a complex area, so professional advice is wise.

Practical examples

Let’s say you work in retail, where the industry index is 75.9 (annualised $82,000 roughly). Your award minimum might be $70,000. If you salary sacrifice $5,000 for flights, your cash drops to $77,000 – still above the award floor. Your cash index becomes about 71.1, below the industry average. That might be fine if the flights are valuable to you.

Now consider a professional in the Professional, scientific and technical sector, index 114.7 (about $124,000). If you sacrifice $15,000 for flights, cash earnings fall to $109,000, index 100.6 – just above the national line. Your total package is $124,000, but the index only sees the cash.

For a FIFO worker in mining (index 154.7, about $167,000), sacrificing $20,000 for flights leaves $147,000 cash, index 135.7 – still well above 100. The flights are often exempt from FBT because they are for work travel.

Key takeaways

• Salary sacrifice flights reduce your cash earnings, so your salary index will be lower than your total remuneration.
• Your cash wage must always meet the award minimum or national minimum wage – whichever is higher.
• Superannuation and FBT implications depend on your specific arrangement.
• The index is a useful benchmark for cash pay, but it doesn’t capture the value of benefits like flights.

If you’re considering salary sacrifice flights, talk to your employer and check your award. Use the salary index to see where your cash earnings sit relative to the national line, but remember that your total package may be stronger.