Railcorp Employee Information Guide

CAR INSURANCE

Salary PackagingEmployee Information Guide

PREPARED FOR RAILCORPSEPTEMBER 2009

SALARY PACKAGING – EMPLOYEE INFORMATION GUIDE | RAILCORP 2EEG109 RAILC | V1 | 0909

Contents

1. Introduction 5

2. Salary Packaging Options 6

2.1 Eligibility 6

2.2 What Benefits are Available? 6

3. Taxation 8

3.1 Novated Motor Vehicle Leasing – Statutory Formula Method 8

3.2 Novated Motor Vehicle Leasing – Employee Contribution Method (ECM) 8

3.3 Future Taxation 9

3.4 Payment Summary Reporting 9

3.5 Reportable Employer Superannuation Contributions 10

4. Administration 11

4.1 Administration of Benefit Funds 11

4.2 Terms and Conditions 11

4.3 Methods of Payment 11

4.4 Reconciliation 12

4.5 Changed Circumstances 12

4.6 Arrangements During Leave 12

4.7 Ending Salary Packaging Arrangements 12

4.8 Ceasing Employment 13

4.9 Reports 13

5. Administration Cost 14

5.1 Package Changes 14

5.2 Manual Claim Payments 14

5.3 Superannuation 14

5.4 Living Away From Home Allowance 14

6. Where To From Here? 15

7. Further Information 16

7.1 Access to Website 16

7.2 Privacy Policy 16

7.3 Access to Your Personal Information 16


Contents (continued)

Appendix 1: Novated Motor Vehicle Lease 17

Appendix 2: Associate Motor Vehicle Lease 19

Appendix 3: Superannuation 21

Appendix 4: Remote Area Rental Assistance 23

Appendix 5: Remote Area Reimbursement of Interest 24

Appendix 6: Remote Area Reimbursement on Purchasing or Building a Property 25

Appendix 7: Remote Area Provision of Gas / Electricity 27

Appendix 8: Remote Area Holiday Travel Assistance 28

Appendix 9: Remote Area Housing (Employer Provided) 30

Appendix 10: Financial Counselling Fees 32

Appendix 11: Home Office Expenses 33

Appendix 12: Professional Memberships & Subscriptions 34

Appendix 13: Relocation Expenses 35

Appendix 14: Self Education Expenses 37

Appendix 15: Work Related Travel 38

Appendix 16: Newspapers and Periodicals 39

Appendix 17: Airport Lounge Membership 40

Appendix 18: Disability and Income Protection Insurance 41

Appendix 19: Interest Only Investment Loan 42

Appendix 20: Living Away from Home Allowance 43

Appendix 21: Taxi Fares to and from Work 44

Appendix 22: Priority of Access Fee for Child Care 45

Appendix 23: Eligible Work Related Items – Tools of the Trade 46


DisclaimerThis Employee Information Guide (the ‘Guide’) has been prepared without consideration of the particular investment objectives, financial situation and needs of individual employees. In all cases, employees should conduct their own investigation and analysis of the information contained in this Guide. No employee should act on the basis of any matter contained in this Guide without taking appropriate legal, financial and other professional advice regarding their own particular circumstances. Each employee who wishes to take advantage of salary packaging is advised to seek financial advice particularly in relation to complex motor vehicle fringe benefits tax and income tax issues.

RailCorp and Maxxia Pty Ltd (Maxxia), each of their employees, and every person involved in the preparation of this Guide, expressly disclaim all liability for any loss or damage of whatsoever kind (whether foreseeable or not) which may arise from any person acting or relying on any statements contained in this Guide, or for any advice given by any salary consultant, and notwithstanding any negligence, default or lack of due diligence and care.

The actions of your employer and Maxxia in paying employment benefits from salary packages to a third party does not in any way imply a transfer of responsibility or liability to the Employer or Maxxia in relation to any agreement, or understanding between the employee and the third party.

Maxxia provides administration and referral services on behalf of employers. It does not provide any form of financial, taxation or financial product advice to employees on the relative merits of package programs or on any other basis. Some information on taxation matters may be provided to illustrate possible advantages, but is of a general nature only. You should seek your own independent professional advice on how packaging programs may impact your particular financial, taxation and welfare benefit circumstances. Maxxia may receive commissions or rebates in connection with some services it provides or arranges to be provided by third parties. By appointing and utilising Maxxia’s services, you consent to its receipt of such commissions and rebates. Tax laws regarding the treatment of salary benefits may change, which could adversely impact your financial, taxation or welfare benefit decisions.

This disclaimer does not limit or alter those statutory rights that cannot be excluded.


1. Introduction The purpose of this Guide is to provide detailed information on the salary packaging arrangements for employees who are eligible to participate. This Guide should be read in conjunction with the RailCorp Salary Packaging Procedure available from the RailCorp intranet (My HR/Policies and Procedures).

The objective of salary packaging is to maximise flexibility for individuals to meet their personal and financial, needs while at the same time ensuring that the benefit arrangements comply with relevant taxation legislation and rulings.

Salary packaging offers a range of advantages to employees including:

• Makingfinancialdecisionsbasedonbeforetaxdollars,notaftertaxdollars;and

• Allocatingsalaryandoptionalbenefitstosuitindividualfinancialandpersonalsituations.

The Income Tax Assessment Act 1936, the Income Tax Assessment Act 1997 and the Fringe Benefits Tax Assessment Act 1986 together with the RailCorp Salary Packaging Procedure regulate and define the type of benefits that can be included in an employee’s salary package, how the benefits are treated for taxation purposes and the administrative arrangements that apply. This legislation or Procedure may change from time to time. If changes do occur employees may be given the opportunity to adjust the structure of their salary package to take account of any new requirements.

Fringe Benefits Tax (FBT) was introduced in 1986 to tax the value of fringe benefits provided by an employer to an employee or associate (related third party) in place of, or in addition to, the employee’s salary or wages. FBT is payable by the employer on fringe benefits provided to employees. However, any FBT costs incurred by the employer will be met from the salary package of the employee.


2. Salary Packaging OptionsIn keeping with modern salary practices, employees will have the discretion to determine the mix of salary and benefits that will constitute their salary package.

2.1 EligibilitySalary packaging will be available to all permanent and temporary RailCorp employees whether employed under a collective agreement or contract.

Note: Temporary employees and employees on fixed term contracts may not salary package a novated or associated motor vehicle lease unless they have 12 months or more remaining on their employment/contract.

The elements of the salary package are:

• Salary;

• Taxation;

• Optionalbenefits;and

• Administrationfee(s).

2.2 What Benefits are Available?The following benefits are available:

1. Concessionally Taxed Benefit Items

• NovatedMotorVehicleLease;

• AssociateMotorVehicleLease;

• ContributionstoSuperannuation;

• RemoteAreaRentalAssistance;

• RemoteAreaReimbursementofInterest;

• RemoteAreaReimbursementonPurchasingorBuildingaProperty;

• RemoteArea–ProvisionofGas/Electricity;and

• RemoteAreaHolidayTravelAssistance

2. FBT Free Benefit Items

• RemoteAreaHousing(Employerprovided);

• FinancialCounsellingFees;

• HomeOfficeExpenses;

• ProfessionalMembershipsandSubscriptions;

• RelocationExpenses;

• SelfEducationExpenses;

• WorkRelatedTravel;

• NewspapersandPeriodicals;

• AirportLoungeMembership;

• DisabilityIncomeProtectionInsurance;

• InterestOnlyInvestmentLoan;

• LivingAwayfromHomeAllowance;


• TaxiFarestoandfromWork;

• PriorityofAccessFeeforChildCare;and

• ToolsofTrade.

At your discretion you may nominate an annual amount for each of these benefits, Fringe Benefits Tax and the Administration fee.

A detailed description of each of the above benefits is provided in the Appendices to this Guide.

3. Full FBT Benefits

There are other items that can be salary packaged but they attract full FBT and so are unlikely to provide a tax benefit for employees. If you are interested in salary packaging other items then you should seek individual advice from an independent financial advisor before entering into a salary packaging arrangement.


3. TaxationThe salary component of the salary package will continue to be subject to Pay As You Go (PAYG) taxation deductions in accordance with the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997.

Each benefit available under the employer’s salary packaging policy falls into one of the following three (3) FBT categories:

1. FBTexemptitems;

2. Concessionallytaxeditems(e.g.novatedmotorvehicleleasing);and

3. Full FBT.

3.1 Novated Motor Vehicle Leasing – Statutory Formula MethodMotor vehicles under a novated lease are concessionally taxed as a result of the calculation of their taxable value for the purpose of applying FBT. Depending on the annual kilometres to be travelled by the vehicle, a percentage factor is applied to its cost price in order to calculate the taxable value. The higher the kilometres travelled, the lower the statutory percentage that is applied.

This is known as the “statutory formula method” of calculating “car fringe benefits tax”. The following table sets out the percentage factors.

Total kilometres travelled during the FBT year (annualised) Statutory percentage

Less than 15,000 26%

15,000 to 24,999 20%

25,000 to 40,000 11%

Over40,000 7%

The taxable value of a motor vehicle provided to the employee by the employer is calculated by the following formula:

Taxable value = [(A x B x C/D) – E] where:

A = the cost value of the car

B = the statutory percentage

C = the number of days in the FBT year when the car was used or available for private use of the employee

D = the number of days in the FBT year

E = the employee contribution (if any)

3.2 Novated Motor Vehicle Leasing – Employee Contribution Method (ECM)

The Employee Contribution Method (ECM) is a common method for salary packaging a motor vehicle whereby the employee agrees to meet the running costs of the vehicle from a combination of pre and post-tax salary, and/or an after–tax contribution to the employer in return for salary packaging the vehicle. The combination of pre and post-tax salary is sent to Maxxia by the employer’s payroll system.

The employee meets the after–tax running costs of the vehicle (fuel, insurance, repairs and maintenance) and in some cases an after–tax contribution to the employer. The result is a reduction in the taxable value of the vehicle when calculating fringe benefits tax (FBT).

The preferred option is to contribute to the employer (as an after-tax payment) an amount equal to the taxable value of the vehicle, the taxable value is reduced to nil, and hence the FBT is reduced to nil.


Example: For a motor vehicle of value $25,000, travelling 18,000 kilometres per annum:

Taxable value of vehicle = [(A x B x C/D) – E]

Taxable Value = [($25,000 x 20% x 365/365) – E]

Taxable Value = $5,000 – E

If E = $5,000, then the Taxable Value (TV) = $0

FBT = TV x 2.0647 x 46.5%

FBT = $0 x 2.0647 x 46.5% = $0

If the total running costs of the motor vehicle were $11,000 per annum, the employee using the ECM would now pay $6,000 from pre–tax salary and $5,000 from after–tax salary.

Where the employee makes an after–tax contribution to the employer in respect of the novated lease, the employee will be liable to Goods and Services Tax (GST). The GST is one-eleventh of the employee contribution.

In the example, the ECM is $5,000, and the GST payable will be $455. This GST amount is not passed on to the employee.

3.3 Future TaxationThe employee must also meet the cost of any current or future taxes payable by Maxxia or the Employer or the Employee under the Fringe Benefits Tax Assessment Act 1986, the Income Assessment Act 1936 and Income Tax Assessment 1997, and A New Tax System (Goods and Services Tax) Act 1999 and related legislation or similar Federal or State legislation.

3.4 Payment Summary Reporting Employers are required to report the “grossed-up” value of fringe benefits on the employee’s payment summary, where the total taxable value of the reportable benefits received in an FBT year exceeds $2,000.

The grossed-up value is the sum of the value of the fringe benefit and FBT that would be payable on the fringe benefit.

EXAMPLE: If the value of the benefit is $2,000 then the grossed-up value is calculated as follows:

Value of Fringe Benefit = $2,000

Notional FBT ($2,000 x 0.8692) = $1,738

“Grossed-up” value ($2,000 + $1,738) = $3,738

Fringe benefits that attract an FBT liability are reported on the payment summary. From 1 July 2009, additional superannuation contributions made under a salary sacrifice arrangement will be included on an employee’s payment summary (Refer to 3.5 following).

The fringe benefits included in a salary package for the FBT year (e.g., 1 April to 31 March of the next calendar year) are reported on the payment summary for the financial year ending 30 June.

The grossed-up value of fringe benefits will be included for most government surcharges and income tests including:

• Childsupportobligations;

• HigherEducationLoanProgram(HELP/HECS)repayment;

• Medicarelevysurcharge;

• PersonalsuperannuationcontributionsRebate;and

• RebateforSpouseSuperannuationContributions.


3.5 Reportable Employer Superannuation ContributionsFrom 1 July 2009, additional superannuation contributions made under a salary sacrifice arrangement will be reported on an employee’s annual payment summary. These contributions are referred to as ‘reportable employer superannuation contributions’. The reportable employer superannuation contributions are not included in an employee’s assessable income, but are included for most government surcharges and income tests.

Unlike other reportable fringe benefits, the reportable employer superannuation contributions are not ‘grossed-up’.Onlytheactualamountsofcontributionsmadearereported.

The reporting period for reportable employer superannuation contributions is 1 July to the following 30 June.

Contributions made by an employer as part of their compulsory superannuation guarantee contributions are not treated as reportable employer superannuation contributions, and will not be included on an employee’s payment summary.


4. AdministrationThe administration of salary packaging has been outsourced to Maxxia, a well-established provider of salary packaging services throughout Australia.

The major functions to be performed by Maxxia in the administration of salary packaging are:

• Paymentoftheselectedbenefititem(s)inaccordancewithinstructionsprovidedbytheemployeeintheSalaryApplicationForm;

• Provisionofreportstoemployees;

• Undertakingfullreconciliationofsalarypackages;

• ObtainingandstoringbenefitpaymentsubstantiationforAustralianTaxationOfficecomplianceandauditpurposes;

• Communicatingdirectlywithemployeesinrelationtosalarypackaging;and

• Answeringqueriesinrelationtosalarypackaging.

The details concerning the administration of salary packaging are set out below and should be carefully read prior to deciding to participate in salary packaging.

4.1 Administration of Benefit FundsUpon commencement of salary packaging the following will be deducted on a pro-rata basis from the employee’s salary:

• Thecostoftheselectedoptionalbenefit(s);

• AnyFBTapplicabletothesebenefits;and

• Theadministrationcost.

The funds for the selected optional benefit(s) will be provided to Maxxia for disbursement.

Payments for benefit items will only be made where sufficient funds exist at the time the payment is due or the employee submits a request for payment. Accordingly, when deciding to allocate money to a particular benefit, employees may wish to provide an additional amount to meet any anticipated increases in the cost of the payments.

4.2 Terms and ConditionsThe following terms and conditions will apply:

• BenefitpaymentswillonlybemadewhereMaxxiahasreceivedasalarypackagededuction;

• Whereinsufficientpackagefundsareavailabletocoverapayment,nobenefitpaymentwillbemade;

• Unlessalternativearrangementshavebeenmade,allbenefitpaymentswillceaseimmediatelyanemployee ceases employment with RailCorp or is suspended without pay or commences on leave without pay;and

• Anemployeemayrequestforanyunspentfundstobereturnedtotheemployeethroughthepayrollsystem when a change is made to the salary package.

These terms and conditions may be updated from time to time.

4.3 Methods of Payment

REGULAR PAYMENTS

Benefit(s) that have a fixed instalment amount and occur on a regular basis (e.g. motor vehicle lease payments) will be paid as a regular payment. The following details should be provided for these payments.

• Nameandaddressofwherepaymentsshouldbemade;

• Frequencyofthepayments;


• Paymentamount;

• Commencementdateforregularpayments;and

• BSBandaccountnumberforregulardirectEFTandpayments.

NON REGULAR PAYMENTS

These payments are for benefit(s) that do not have a fixed instalment amount, or do not occur on a regular basis (e.g. motor vehicle registration). Payments will be made on receipt of a completed Reimbursement Claim Form.

An employee who pays directly the cost of a benefit(s) will be reimbursed on receipt of a completed Reimbursement Claim Form. Reimbursement will be by electronic funds transfer (EFT) to the employee’s nominated bank or credit union account. Employees may make one manual claim per quarter free of charge. Please refer to the Administration Cost section (5.2) for details.

Non-regular payments and reimbursements will be made by Maxxia, subject to the employee having sufficient package funds, within two business days of receiving an employee’s request. Please note that the bank may take another few days to clear funds.

4.4 ReconciliationA reconciliation of the salary package will occur when an employee alters their salary package.

Any balance remaining in an employee’s salary package on termination of employment will be paid as salary and taxed accordingly.

Where Maxxia pays any expense that relates to the employee’s salary package, which is in excess of the amount nominated, the employee will be required to repay such an expense.

4.5 Changed CircumstancesAn employee may alter their salary package at no cost once in the FBT year (i.e. 1 April to 31 March of the next year). Additional changes may be made but will be subject to a fee of $55 (including GST).

4.6 Arrangements During LeaveSalary packaging arrangements will continue to be deducted from an employee’s pay during periods of paid leave including long service leave, extended sick leave, and maternity/adoption leave.

An employee who takes periods of unpaid leave including a career break, leave without pay or unpaid maternity, paternity, parental or adoption leave is responsible for

• NotifyingMaxxia–priortotheleave,wherepossible–iftheleavewillaffectsalarypackagingarrangements and

• Makingtheirownpaymentstomeetanycommitmentsundersalarypackagingarrangements.

An employee who wishes to resume salary packaging payments after a period of unpaid leave is also responsibleforinformingthefundororganisationtowhichpaymentsaretobemade;andmakingthenecessary arrangements through Maxxia, as appropriate.

4.7 Ending Salary Packaging ArrangementsAn employee may elect at any time to cease salary packaging by giving at least twenty-eight (28) days notice in writing to Maxxia.

In all circumstances where an employee’s salary packaging arrangements cease, it is necessary that the employee notify Maxxia of their cessation date. This enables Maxxia to send final payments and determine any action to be taken with account balances.

Any unspent funds will be returned to the employer who will arrange for these funds to be returned to the employee via the payroll system. Note that these funds will be subject to PAYG taxation.


Any additional costs incurred as a result of termination of an employee’s salary package arrangements must be paid by the employee and will be deducted from the employee’s final termination payment.

Unless alternative arrangements have been made, all benefit payments will cease immediately an employee commences a period of suspension without pay.

4.8 Ceasing EmploymentUpon ceasing employment, an employee’s entitlement to salary package ceases. The employee is responsible for advising the fund or organisation to which salary packaging payments have been made prior to leaving the employer of future payment arrangements.

An Employee who has a current novated lease at the time that they terminate their employment will need to have their lease and FBT liabilities reconciled prior to the processing of their termination payments. Failure to supply all the relevant information to Maxxia may delay the processing of final payments.

Similarly an employee who has been salary packaging other benefit options should notify Maxxia as soon as they are aware they are leaving so that their account can be reconciled and final payments not delayed.

4.9 ReportsEmployees participating in salary packaging will receive quarterly reports in hard copy that provide details on payments made for selected benefit items.

In addition the following online transaction reports are available:

• Account Balance Report –showsthepackagingaccountbalanceatthetimeofaccessingthereport;and

• Transactions in Last 90 days – lists the salary packaging contributions received and details of payments made during the last 90 days.

The instructions for accessing online reports by the internet will be provided to the employee at the commencement of salary packaging.

Employees can obtain an account balance by phone between the hours of 8:00am – 6:00pm (EST/EDST) by calling Maxxia on 1300 123 123.


5. Administration CostEmployees who choose to participate in salary packaging will be required to include the administration cost within their salary package.

Administration Fee Description Annual Fee (Including GST)

Salary packaging one FBT free benefit Item by a Participating Employee. $55.00

Salary packaging one or more benefits (excluding a novated motor vehicle lease) by a Participating Employee.

$110.00

Salary packaging a novated motor vehicle lease only by a Participating Employee.

$210.00

Salary packaging a combination of benefits including a novated motor vehicle lease by a Participating Employee.

$210.00

The supply of the Vehicle Management Service to a Participating Employee (other than the issue of a fuel card)

$300.00

Please note that where an employee salary packages for less than twelve (12) months between 1 April and 31 March of the following year, Maxxia shall be entitled to receive one hundred (100) percent of the annual administration fee.

5.1 Package ChangesAn employee may alter their salary package at no cost once in the FBT year (i.e. 1 April to 31 March of the next year). Additional changes may be made but will be subject to a fee of $55 (including GST).

5.2 Manual Claim PaymentsAn employee may submit up to one claim per quarter for reimbursement each FBT year. Additional claims will incur a fee of $15 (including GST).

5.3 SuperannuationAll administration fees associated with the salary packaging of Superannuation will be paid by RailCorp.

5.4 Living Away From Home Allowance Employees choosing to salary package the Living Away From Home Allowance benefit will not have to pay an administration fee.


6. Where To From Here?If you wish to enquire about salary packaging or a novated motor vehicle lease, call the Maxxia 1300 123 123.

OryoucancompletetheSalaryPackagingApplicationFormandforwarddirectlytoMaxxiaatthefollowingaddress:

Maxxia Pty Ltd Locked Bag 18 Collins Street East MELBOURNEVIC8003

Upon receipt of the completed Salary Packaging Application Form, Maxxia will process the information and forward to you confirmation of the arrangements that will be put in place.

Copies of the Salary Packaging Application Form are available from the RailCorp intranet (My HR/Policies and Procedures).


7. Further InformationA toll-free enquiry service has been established to provide information to employees in relation to salary packaging. This service does not provide financial advice. However, the operators can assist with general information regarding the salary packaging options that are available.

The enquiry service operates from 8.00 a.m. to 6.00 p.m. (EST/EDST) Monday to Friday.

Salary Packaging Establishmen: 1300 123 123 Vehicle Lease Enquiries: 1300 123 123 General Enquiries: 1300 123 123 Website Address: www.maxxia.com.au

7.1 Access to WebsiteGeneral information about salary packaging is available at www.maxxia.com.au

Specific information including this Guide, Application Forms and Declarations are available by logging with the following user id and password:

USER ID: RAILCORP

PASSWORD: NSW

All participating employees can also access their salary packaging reports online using the Internet. The instructions for accessing online reports will be provided when the employee commences salary packaging.

7.2 Privacy PolicyMaxxia is bound by the National Privacy Principles of the Privacy Amendment (Private Sector) Act 2000. Maxxia has stringent procedures in place to ensure the strict confidentiality of personal client information.

Maxxia’s Privacy Policy regulates the type of personal information Maxxia collects as well as the use of the personal information. Your personal information is used by Maxxia to provide you with salary packaging administration services, and in some cases to assist you in the acquisition of a motor vehicle under a novated lease. Maxxia may also use this information to keep you informed of new Maxxia products and services.

You can obtain a copy of the Maxxia Privacy Policy by contacting Maxxia (as above). Alternatively you can obtain a copy of the Privacy Policy from our website at www.maxxia.com.au

7.3 Access to Your Personal InformationUnder the National Privacy Principles you are generally entitled to access the personal information Maxxia holds about you. You can request access to your personal information by writing directly to Maxxia at:

ThePrivacyOfficer

Maxxia Pty Ltd Locked Bag 18 Collins Street East Melbourne VIC 8003

[email protected]

Where you are entitled to obtain access to your personal information, the time required to give you access will depend on the type of information requested. In some circumstances Maxxia may charge you a fee for providing access to your personal information. The fee will be based on our costs in locating the information and the form of access you require. In all cases Maxxia will provide you with an estimate of the fee so that you can confirm that you still require access to your personal information.


Appendix 1:

NOVATED MOTOR VEHICLE LEASE

DESCRIPTION This is an arrangement whereby a motor vehicle is provided to an employee by the employer through a novated lease, within the employer’s guidelines.

You must use your employer’s Deed of Novation, which is available from Maxxia.

What is Allowed? • DirectLeasepayments.

• Runningcosts(egfuel,insurance,registration,servicing,maintenanceandtyres).

• Thecostofstampdutyandothercostsrelatedtothepurchaseofthemotorvehicle can only be salary packaged as part of the lease cost, i.e. not as running costs.

Restrictions • Wherecapitalimprovementsaremadetothemotorvehicle(egsunroof,CDplayer) after the commencement of the lease, these items cannot be included in the salary package.

• V8poweredvehiclescannotbesalarypackaged.

Employee Contribution Method

• TheEmployeeContributionMethod(ECM)enablesanemployeetoreducetheFBT of a novated motor vehicle to nil by making a post tax contribution to the operating costs of the vehicle.

• Theamountofemployee’scontributionrequiredmustbeequaltothetaxablevalue of the motor vehicle. Contributions made by an employee are subject to GST. The GST on the employee contributions is calculated as 1/11th of the amount contributed by the employee.

Taxation Issues • TheGoodsandServicesTaxdoesnotapplytoMotorVehicleRegistration,butdoes apply to the component relating to compulsory third party insurance.

• InputTaxCreditsareavailable.

• Thecostofanovatedmotorvehiclesalarypackagedare“grossedup”andmaybe included on the employee’s payment summary.

• WheretheemployeeadoptstheECMandreducestheFBTonthemotorvehicleto Nil, the benefit will not be included on the employee’s payment summary.

• MaxxiawillcontacteachemployeewithamotorvehicleleaseinSeptemberandDecember of each year to obtain an interim motor vehicle odometer declaration. If the actual distance travelled to date is not within ten per cent of the forecast amount for the FBT year then Maxxia will advise the employer to increase the employee’s FBT/ECM contributions from their salary package. In addition where a declaration is not received Maxxia will notify the employer for appropriate action.

• EachEmployeewillberequiredtolodgeanendofFBTyearodometerreadingwith Maxxia by 7 April of each year. Where the employee does not provide Maxxia with a completed declaration then Maxxia will calculate the FBT liability based on the highest statutory fraction.


Substantiation • DeedofNovation(signatorypageandfrontpageoflease,includingtheexecution date, only required).

• Copyofthefinanceschedulefromthefinancelease.

• Dealerinvoiceforthepurchasepriceofthemotorvehicle.

• Originalinvoicesmustbesubmittedwhereanemployeeisseekingadirectpayment for registration or insurance.

• AttheendofeachFBTyeartheemployeeisrequiredtoprovideadeclarationin relation to the opening and closing odometer readings for the number of kilometres travelled during the FBT year.

Employee Declaration

• Wheretheodometerreadingdeclarationisnotprovidedbytheemployeeattheend of the FBT year, the FBT on the motor vehicle will be calculated using the highest statutory percentage (i.e. 26%), resulting in a higher than budgeted FBT liability.

• A‘MotorVehicle-FuelandOilExpensesDeclaration’willberequiredwherepayments towards the running costs are being claimed to reduce the taxable value of the motor vehicle.

Form of Payment • Leasepayments–madedirectlytofinancier.

• Motorvehiclechargecard–fuelandmaintenance.

Additional Information

• Whereinputtaxcreditsareavailable,ataxinvoicemustbesubmittedwiththeclaim form.

Further Information about Novated Leasing

Maxxia Pty Ltd Telephone: 1300 123 123 Fax: 1300 733 444 Email:[email protected]


Appendix 2:

ASSOCIATE MOTOR VEHICLE LEASE

DESCRIPTION An associate lease involves the leasing of a vehicle owned or being purchased by an associate of the employee (spouse, child over 18 year of age, family member or family company). The associate leases the vehicle to the employer who in turn provides it to the employee as part of his or her salary package.

What is Allowed? • Directleasepayments.

• Runningcosts(egfuel,insurance,registration,servicing,maintenanceandtyres)

• Thecostofstampdutyandothercostsrelatedtothepurchaseofthemotorvehicle can only be salary packaged as part of the lease cost, i.e.: not as running costs.

Restrictions • Wherecapitalimprovementsaremadetothemotorvehicle(e.g.sunroof,cdplayer) after the commencement of the lease, these items cannot be included in the salary package.

• V8poweredvehiclescannotbesalarypackaged.

Substantiation • CopyofAssociateLeasedocumentation.

• Dealersinvoiceevidencingthepurchasepriceofthemotorvehicleifthevehicleis purchased at the commencement of the Associate Lease.

• Independentvaluationofthemotorvehicleifthevehicleisalreadyowned or being purchased by the “associate” prior to the commencement of the associate lease.

• Originalreceiptsmustbesubmittedforreimbursementofrunningcostsincurred by the employee where a fuel card is not used.

• Originalinvoicesmustbesubmittedwhereanemployeeisseekingadirectpayment for registration or insurance.

Taxation Issues • ConcessionalFBTappliesandiscalculatedbyusingthestatutoryformulamethod.

• TheGoodsandServicesTaxdoesnotapplytoMotorVehicleRegistration,butdoes apply to the component relating to compulsory third party insurance.


• Thecostofanovatedmotorvehiclesalarypackagedare“grossedup”andmaybe included on the employee’s payment summary.

• WheretheemployeeadoptstheECMandreducestheFBTonthemotorvehicleto Nil, the benefit will not be included on the employee’s payment summary.

• MaxxiawillcontacteachemployeewithamotorvehicleleaseinSeptember and December of each year to obtain an interim motor vehicle odometer declaration. If the actual distance travelled to date is not within ten per cent of the forecast amount for the FBT year, then Maxxia will advise the employer to increase the employee’s FBT/ECM contributions from their salary package. In addition where a declaration is not received Maxxia will notify the employer for appropriate action.


Taxation Issues (continued)

• EachemployeewillberequiredtolodgeanendofFBTyearodometerreadingwith Maxxia by 7 April of each year. Where the employee does not provide Maxxia with the odometer reading, Maxxia will calculate their FBT liability based on the highest statutory percentage.

• ThelodgementoftheendofFBTyearodometerreadingisdoneviatheMaxxiaautomated telephone odometer reading service.


• Wheretheodometerreadingdeclarationisnotprovidedbytheemployeeattheend of the FBT year, the FBT on the motor vehicle will be calculated using the highest statutory percentage (i.e. 26%), resulting in a higher than budgeted FBT liability.

• A‘MotorVehicle-FuelandOilExpensesDeclaration’willberequiredwherepayments towards the running costs are being claimed to reduce the taxable value of the motor vehicle.

• RepaymentofanyFBTincurredistheresponsibilityoftheemployee.

Form of Payment • Leasepayments–madedirectlytotheassociate.

• Motorvehiclechargecard–fuelandmaintenance.

Package Cost Lease payments, running costs and Fringe Benefits Tax.


• Theassociatepartyinanassociateleasearrangementisstronglyencouragedtotake their own professional advice in relation to the financial, taxation and legal considerations for them in participating in the associate lease transaction.


Further Information about Associate Leasing

Maxxia Pty Ltd Telephone: 1300 123 123 Fax: 1300 733 444 Email:[email protected]


Appendix 3:

SUPERANNUATION

DESCRIPTION • Anemployeemaysalarypackageadditionalsuperannuationcontributionstoa complying superannuation fund. A complying superannuation fund must be registered and comply with the requirements of the Australian Prudential RegulatoryAuthorityandAustralianTaxationOffice.

• EmployeesshouldnotethatCommonwealthlegislationmayrestrictanemployee’s access to superannuation contributions under a salary packaging arrangement until the employee reaches a prescribed preservation age.

• Contributionstothesuperannuationfundcanonlybemadeonbehalfoftheemployee. Contributions cannot be made on behalf of the employee’s spouse.

First State Super (FSS)

• EmployeeswhocurrentlyhaveasuperannuationaccountopenedwithFirstStateSuper can have their salary packaging contributions to superannuation paid into that account.

• SalarypackagedsuperannuationcontributionscanbechangedonceeachFBTyear (i.e. from 1 April to 31 March) in addition to the usual annual nomination at no cost. A fee may be charged for further changes to cover additional administration costs.

• InordertosalarypackagecontributionstoFirstStateSuper(FSS)pleasecontact Maxxia on 1300 123 123.

State Authorities Superannuation Scheme (SASS) and State Superannuation Scheme (SSS)

• EmployeeswhoaremembersofSASSorSSSmaysalarypackagetheircompulsory personal superannuation contributions either: − entirely from their before-tax salary or − from a combination of before-tax and after-tax salary.

• AdditionalcontributionscannotbepaidintoSASSandSSSundersalarypackaging arrangements because of restrictions imposed by rules of the SASS and SSS funds.

• SASSandSSSmemberswhowishtosalarypackagetheircompulsorypersonalsuperannuation contributions should:

• seekprofessionalfinancialadviceabouttheimplicationsofdoingthisbeforechanging current arrangements note that:

− salary packaging contributions to superannuation attract a 15% contributions tax and so SASS and SSS members will have to increase their before tax contribution rate to achieve the same net contribution that they would have made through after-tax contributions

− they will need to advise their fund of any change they wish to make to their contribution rate by the fund’s required deadlines.

• InordertosalarypackagecontributionsintoSASSorSSSpleasecontactBusiness Services Payroll at RailCorp.

• Moreinformationonsalarysacrificing

− FSS can be found at www.firststatesuper.com.au

− SASS and SSS compulsory personal contributions can be found at www.statesuper.nsw.gov.au


Taxation Issues • Superannuationcontributionssalarypackagedarenotreportedontheemployee’s payment summary as a fringe benefit.

• SalarypackagedsuperannuationpaymentsaresubjecttoaContributionTaxof15% that is deducted by the superannuation fund and remitted to the Australian TaxationOffice.

• TheGoodsandServicesTaxdoesnotapplytosuperannuationpayments.

• InputTaxCreditsarenotavailable.

• FringeBenefitsTaxdoesnotapply.

Form of Payment • Regularpaymentmadedirectlytothesuperannuationfund.

• Non-regularpaymentscanalsobemadetothesuperannuationfund.

Package Cost Cost of the superannuation contribution from salary package.


• Superannuationpaymentsmadebyanemployeetothesuperannuationfundcannot be reimbursed.

• AlladministrationfeesassociatedwiththesalarypackagingofSuperannuationwill be paid by RailCorp.


Appendix 4:

REMOTE AREA RENTAL ASSISTANCE

DESCRIPTION An employee may salary package their private rental payments where:

• Theaccommodationisinaprescribedremotearea;

• Theaccommodationistheemployee’susualplaceofresidence;

• Theemployeeisacurrentemployee;and

• TheFBTrequirementsfortheFBTconcessionaremet.

What is Allowed? 50% of rental, less any reimbursement received from the employer, incurred on accommodation in a prescribed remote area.

Taxation Issues • Thetaxablevalueoftherentalwillbereducedby50%,andFBTappliedaccordingly.

• TheGoodsandServicesTaxdoesnotapply.


• Thetaxablevalueofremoteareahousingrentalisgrossed-upandmaybereported on the employee’s payment summary as a fringe benefit.

Substantiation • Foradministrativepurposes,Maxxiawillnotmakethedecisiononwhetherornotthe housing is in a prescribed remote area.

• Forthebenefittobeallowed,anauthorisedrepresentativeoftheemployermustsign the ‘Employer Declaration’. If the employer does not sign the declaration, the benefit will not be made available to the employee.

Form of Payment Regular reimbursement to the employee where proof of payment has been provided.

Package Cost The cost of the annual rental plus the applicable FBT.

Calculation Annual rental cost = $20,000

Taxable value = ($20,000 x 50%) = $10,000

Less reduction of taxable value, 50% of gross rent = $10,000

Reduced taxable value = $0

FBT = $0


Not applicable.


Appendix 5:

REMOTE AREA REIMBURSEMENT OF INTEREST

DESCRIPTION An employee may salary package the interest payments accrued on a housing loan provided:

• Theaccommodationisinaprescribedremotearea;

• Theaccommodationistheemployee’susualplaceofresidence;

• Theemployeeisacurrentemployee;and

• TheFBTrequirementsfortheFBTconcessionaremet.

Note, this benefit does not provide for the payment of loan repayments.

What is Allowed? Interest, less any reimbursement received from the employer, incurred on a housing loan for accommodation is a prescribed remote area.

Taxation Issues • Thetaxablevalueoftheinterestonthehousingloanwillbereducedby50%,and the FBT calculated accordingly.



• TheRemoteAreaReimbursementofInterestfringebenefitisgrossed-upandmay be reported on the employee’s payment summary as a fringe benefit.

Substantiation • Foradministrativepurposes,Maxxiawillnotmakethedecisiononwhetherornotthe housing is in a prescribed remote area.

• Forthebenefittobeallowed,anauthorisedrepresentativeoftheemployermustsign the ‘Employer Declaration’. If the employer does not sign the declaration, the benefit will not be made available to the employee.

Form of Payment • Reimbursementonly.

• Acompleted‘RemoteAreaHousingAssistance–ReimbursementofInterest’form must be submitted to Maxxia.

Package Cost • ThecostoftheinterestperannumplustheapplicableFBT.

• Totalpackagecost=Interestcost+(Interestcostx0.4346).

Calculation Annual interest cost = $20,000

Taxable value = ($20,000 x 50%) = $10,000

FBT = $10,000 x 46.5% x 1.8692 = $8,691.78

Package cost = $20,000 + ($20,000 x 0.4346) = $28,691.78


Not applicable.


Appendix 6:

REMOTE AREA REIMBURSEMENT ON PURCHASING OR BUILDING A PROPERTY

DESCRIPTION An employee may salary package the costs incurred on:•

thepurchaseofapropertyinaprescribedremotearea;•

thepurchaseoflandtobuildahomeinaprescribedremotearea;•

the deposit and principal•

providedtheFBTrequirementsfortheFBTconcessionaremet.•

What is Allowed? Costs associated with the acquisition of a property (including purchase cost, stamp duty, lending fees and charges etc) in a prescribed remote area, and costs associated with the acquisition of land to build a home in a prescribed remote area.

Taxation Issues The taxable value of the cash reimbursement on the purchase or building a •property will be reduced by 50% and FBT calculated accordingly.

The Goods and Services Tax does not apply.•

The Type 2 gross-up factor of 1.8692 applies to ‘Remote Area Reimbursement •on Purchasing or Building a Property’.

Input Tax Credits are not available.•

The taxable value of this benefit is grossed-up and may be reported on the •employee’s payment summary as a fringe benefit.

The following conditions must be met in order for the 50% reduction of the •taxable value to apply:

The employee will occupy the property as their usual place of residence •immediatelyaftersettlement;or

The employee will construct a dwelling to be occupied as their usual place •of residence.

The employee must complete a declaration to this effect.•

Substantiation CopyofOfferandAcceptanceandSettlementStatementshowingthepurchase•date and costs incurred.

Statements/invoices substantiating other costs such as stamp duty.•

An authorised representative of the employer must complete the employer •declaration.

The employee declaration must be completed.•

Form of Payment Maxxia will reimburse the employee by EFT directly into their nominated bank account.

Package Cost The cash reimbursement per annum plus the applicable FBT.•

Total package cost = Cash reimbursement + (cash reimbursement x 0.4346).•

Calculation Cash reimbursement = $20,000

Taxable value = $20,000 x 50% = $10,000

FBT = $10,000 x 46.5% x 1.8692 = $8,691.78

Package cost = $20,000 + ($20,000 x 0.4346) = $28,691.78


ExampleNote: This example is for illustrative purposes only. You should contact a licensed financial advisor for the impact of salary packaging on your personal requirements.

This example applies to:

Rental Assistance•

Reimbursement of Interest•

Reimbursement on Purchasing or Building a Property•

Assumptions:

Annual salary $120,000•

Payment towards a remote area housing assistance benefit is $20,000•

PAYG rates effective 1 July 2009•

Input tax credits are passed back to the employee•

Item No Packaging Packaging

Salary $120,000 $120,000

Rental payment $0 ($20,000)

FBT $0 ($8,692)

Administration fee $0 ($280)

Input tax credits $0 $25

Net Salary $120,000 $91,003

Tax & Medicare ($34,850) $91,003

Net Salary $85,150 $67,607

Interest/Rent/Purchase ($20,000) $0

Net Cash Salary $65,150 $67,607

Net Benefit n/a $2,457


Appendix 7:

REMOTE AREA PROVISION OF GAS/ELECTRICITY

DESCRIPTION An employee residing in a prescribed remote area may salary package the cost of gas and electricity.

What is Allowed? • Thecostofthegasandelectricity.

• Anemployeecannotsalarypackageanyexpensesthathavebeenreimbursedbythe employer.

Taxation Issues • Thetaxablevalueofthegasorelectricitypaymentwillbereducedby50%,andFBT applied accordingly.

• TheGoodsandServicesTaxappliestogasandelectricity.


• Thetaxablevalueofremoteareagasandelectricityisgrossed-upandmay be reported on the employee’s payment summary as a fringe benefit.

Substantiation Originalreceipts/taxinvoicesmustbesubmittedwhenseekingreimbursement of expenses.


Not required.

Form of Payment Reimbursement to the employee where proof of payment has been provided.

Package Cost The cost of the gas or electricity plus the applicable FBT.


Where input tax credits are available, a tax invoice must be submitted with the claim form.


Appendix 8:

REMOTE AREA HOLIDAY TRAVEL ASSISTANCE

DESCRIPTION An employee who resides in a prescribed remote area may salary package certain expenses incurred in relation to holiday travel (of more than 3 days annual or long service leave) from the remote area and return for themselves, their partner and child/children.

What is Allowed? The expenses that may be salary packaged are:

• Airfares;

• Meals(enrouteonly);

• Accommodation;

• Traveltoandfromtheholidaydestinationintheemployee’sowncar;

• Hirecarandhirecarcosts;and

• Anycostsassociatedwiththetransporttoandfromtheholidaydestination.

• Expenseswillbereimbursedinrespectoftheemployee,theirspouse(includinga defacto spouse) and their children.

• Expensesforwhichtheemployeehasreceivedreimbursementfromtheiremployer cannot be salary packaged.

• Employeesarenottoincluderequestsforpaymentsdirectlytothirdparties.Theemployee must make the payment and then seek reimbursement from Maxxia.

• Falseclaimsforreimbursementwillbereferredtotheemployerandtheemployee may be denied further access to the salary packaging program.

Taxation Issues • TheFBTpayableisdependentupontheemployee’s‘pointofhire’(aslistedintheir employment agreement) and their destination.

• TheestimatedamountofFBTwillbecalculatedatthetimeofestablishingtheemployee’s salary package and deducted from the employee’s pre-tax salary in addition to the cost of the chosen benefit.

• ThetaxablevalueofRemoteAreaHolidayTravelAssistanceisgrossed-upandmay included reported on the employee’s payment summary as a fringe benefit.

• TheGoodsandServicesTaxappliestotravelwithinAustralia.


• FBTappliestothecostofremoteareaholidaytravelassistance.

Substantiation Originalreceipts/taxinvoicesmustbesubmittedwhenseekingreimbursementofexpenses.


Not required.


Form of Payment • Theemployeemustsubmitacompleted‘RemoteAreaHolidayTravelAssistanceClaim’ form.

• Foreachexpenseincludedontheclaimform,theemployeemust:

• providethemerchantname,paymentdescription,dateofpaymentandthepaymentamount(includingGST);and

• attachtheoriginalreceipt/taxinvoice.

• Reimbursementsofpaymentsmadebycreditcardwillonlybemadewhereoriginal receipts/tax invoices are submitted with the claim form. Credit card statements are not sufficient substantiation and will not be accepted by Maxxia.

• Maxxiawillnotmakepartialpaymentsofanamountclaimed.Itisextremelyimportant that employees ensure that there are sufficient funds in their account to fully satisfy the total amount claimed. If there are insufficient funds in the account, the claim will be returned to the employee for re-submission when sufficient funds are available.

Package Cost The cost of the Remote Area Holiday Travel Assistance payments plus the applicable FBT.




Appendix 9:

REMOTE AREA HOUSING (EMPLOYER PROVIDED)

DESCRIPTION An employee may salary package rental payments in respect of accommodation provided by their employer. The accommodation must be in a remote area and theFBTrequirementsfortheFBTexemptionmustbemet.

What is Allowed? Rental payments to the employer for accommodation located in a prescribed •remote area.

The employee must reside in accommodation leased or owned by the employer •in a prescribed remote area.

An employee cannot salary package any expenses that have been reimbursed by •the employer.

Taxation Issues FBT will not apply if the above conditions have been met.•

The Goods and Services Tax does not apply.•

The Type 2 gross-up factor of 1.8692 applies to ‘Remote Area Housing •(Employer Provided)’.

Input Tax Credits are not available.•

The Remote Area Housing fringe benefit is not reported on the employee’s •payment summary as a fringe benefit.

Substantiation For administrative purposes, Maxxia will not make the decision on whether •the employer has provided the housing, or whether or not the housing is in a prescribed remote area.

For the benefit to be allowed, an authorised representative of the employer must •sign the ‘Employer Declaration’. If the employer does not sign the declaration, the benefit will not be made available to the employee.

Form of Payment The payment of this benefit will be made directly by EFT to the employer in accordance with the salary payment cycle.

Package Cost The cost to the salary package will be the annual cost of the rental.


ExampleNote: This example is for illustrative purposes only. You should contact a licensed financial advisor for the impact of salary packaging on your personal requirements.

This example applies to:

Rental Assistance•

Reimbursement of Interest•

Reimbursement on Purchasing or Building a Property•

Assumptions:

Annual salary $120,000•

Rental payment $20,000•

PAYG rates effective 1 July 2009. Input tax credits are passed back to the •employee

Item No Packaging Packaging

Salary $120,000 $120,000

Rental payment $0 ($20,000)

FBT $0 ($8,692)

Administration fee $0 ($280)

Input tax credits $0 $25

Net Salary $120,000 $91,003

Tax & Medicare ($34,850) $91,003

Net Salary $85,150 $67,607

Interest/Rent/Purchase ($20,000) $0

Net Cash Salary $65,150 $67,607

Net Benefit n/a $2,457


Appendix 10:

FINANCIAL COUNSELLING FEES

DESCRIPTION An employee may salary package the cost of the provision of salary packaging advice from a financial adviser, or accountant.

What is Allowed? The professional fees charged by the adviser or accountant to the employee in relation to the provision of the advice.

Taxation Issues • Financialcounsellingfeesare“otherwisedeductible”andarenotreportedonthe employee’s payment summary as a fringe benefit.

• TheGoodsandServicesTaxappliestofinancialcounsellingfees.



Substantiation • Submittheoriginalreceipt/taxinvoiceandaclaimforreimbursementof expense incurred


A completed ‘Expense Payment Fringe Benefit Declaration’ must be submitted to Maxxia on each occasion that a reimbursement claim is made.

Form of Payment Reimbursement to the employee where the original receipt/tax invoice and a completed claim from has been forwarded to Maxxia.

Package Cost The cost of the professional fees.




Appendix 11:

HOME OFFICE EXPENSES

DESCRIPTION An employee may salary package the cost of certain expenses related to the employee undertaking work related activities at their home.

What is Allowed? • Expensesassociatedwithhomeworkingfacilitiesmayincludestationery,aleased or rented computer or similar business equipment such as a facsimile, filing cabinet and photocopier.

• Repairs,maintenanceandsoftwareexpensesrelatedtoacomputermaybeincluded within the salary package.

• Expensesofacapital,privateordomesticnaturecannotbeincludedinthesalary package.

Taxation Issues • Homeofficeexpensesare“otherwisedeductible”andarenotdisclosedasaReportable Fringe Benefit on the employee’s PAYG Payment Summary.

• TheGoodsandServicesTaxappliestohomeofficeexpenses.



Substantiation Submit the original receipt/tax invoice and a claim for reimbursement of expense incurred.


The “Expense Payment Fringe Benefit Declaration” in the salary packaging application form must be completed and submitted prior to the commencement of reimbursements.

Form of Payment Reimbursement to employee where the original receipt/tax invoice tax invoice and a completed claim form has been forwarded to Maxxia.

Package Cost Cost of the home office expenses.




Appendix 12:

PROFESSIONAL MEMBERSHIPS & SUBSCRIPTIONS

DESCRIPTION • Anemployeemaysalarypackagethecostofprofessionalmemberships.

• Aprofessionalassociationisdefinedasanorganisationwiththesolepurposeof enhancing the interests of the members of a particular profession, trade or occupation.

What is allowed? Payment of annual or periodical membership fees.

Taxation Issues • Wheretheprofessionalmembershipsandsubscriptionsarework-relatedtheyare not disclosed as a Reportable Fringe Benefit on the employee’s PAYG Payment Summary.

• TheGoodsandServicesTaxof10%appliestothecostofprofessionalmemberships and subscription fees.



Substantiation • Anemployeemustsubmittheoriginalaccountfordirectpaymentofmembership fees.

• Anemployeemustsubmittheoriginalreceiptforreimbursementofexpensesincurred by the employee in relation to this benefit item.


The “Expense Payment Fringe Benefit Declaration” in the salary packaging application form must be completed and submitted prior to the commencement of payments/reimbursements.

Form of Payment • Directpaymenttoathirdpartywheretheemployeesubmitstheoriginalaccount.

• Reimbursementtotheemployeewhereanoriginalreceipt(s)havebeenforwarded to Maxxia.

Package Cost Cost of fees and/or subscription.


Requests for reimbursements/direct payments will only be processed where original receipts/invoices have been forwarded with claims.


Appendix 13:

RELOCATION EXPENSES

DESCRIPTION An employee may salary package the cost of relocation expenses incurred in moving the employee and family members from one locality to another for employment purposes.

What is Allowed? • Relocationtravelcosts,includingmealsandaccommodationenroute,oftheemployee and family members.

• Thecostofremovaloffurnitureandpersonaleffects,includinginsurance and storage.

• Thecostsoftemporaryaccommodation,bothattheoldlocalityandthe new locality.

• Thecostofleasingfurnitureforthetemporaryaccommodation.

• Thecostofconnectingtelephone,electricityorgasservicestothe temporary accommodation.

• Necessarymealcostsatahotel,motelorrestaurant(inexcessof$2per meal per adult or $1 per child under 12 years).

• Advancestocoversuchitemsasarentalbondorelectricityorgasdeposits,provided the advance is repayable within one year.

• Homesaleandpurchasecosts,includingstampduty,legalfeesandestateagent’s commission.

Taxation Issues • Thecostofrelocationexpensesarenotreportedontheemployee’spaymentsummary as a fringe benefit.

• TheGoodsandServicesTaxappliestorelocationcostswhereincurredwithinAustralia.


• FringeBenefitsTaxdoesnotapplytorelocationexpenses.

Substantiation Submit original receipt/invoice for reimbursement of the expense incurred by the employee.


Not required.

Form of Payment An employee may salary package the cost of relocation expenses incurred in moving the employee and family members from one locality to another for employment purposes.

Package Cost • Relocationtravelcosts,includingmealsandaccommodationenroute,oftheemployee and family members.

• Thecostofremovaloffurnitureandpersonaleffects,includinginsurance and storage.

• Thecostsoftemporaryaccommodation,bothattheoldlocalityandthe new locality.

• Thecostofleasingfurnitureforthetemporaryaccommodation.

• Thecostofconnectingtelephone,electricityorgasservicestothetemporaryaccommodation.


Package Cost (continued)

• Necessarymealcostsatahotel,motelorrestaurant(inexcessof$2permealper adult or $1 per child under 12 years).

• Advancestocoversuchitemsasarentalbondorelectricityorgasdeposits,provided the advance is repayable within one year.

• Homesaleandpurchasecosts,includingstampduty,legalfeesandestateagent’s commission.


• Thecostofrelocationexpensesarenotreportedontheemployee’spaymentsummary as a fringe benefit.

• TheGoodsandServicesTaxappliestorelocationcostswhereincurred within Australia.


• FringeBenefitsTaxdoesnotapplytorelocationexpenses.


Appendix 14:

SELF EDUCATION EXPENSES

DESCRIPTION An employee may salary package the cost of work related self education expenses.

What is allowed? • Thecostofaprescribedcourseofeducationincludinganytextbooksorequipment relevant to the course of study.

• Registrationfeesincurredinrelationtoworkrelatedconferencesand/orseminars.

• PaymentstotheHigherEducationLoanProgram(HELP/HECS)cannotbeincluded under self education expenses.

Taxation Issues • Wheretheselfeducationexpensesareworkrelatedtheyarenotreportedonthe employee’s payment summary as a fringe benefit.

• TheGoodsandServicesTaxdoesnotapplytomostselfeducationexpenses.


• FringeBenefitsTaxdoesnotapplywheretheselfeducationexpensesare work related.

Substantiation Submit the original receipt/tax invoice and a claim for reimbursement of expense incurred.



Form of Payment Reimbursement to employee where the original receipt/tax invoice and a completed claim form has been forwarded to Maxxia.

Package Cost Cost of the allowable expenses incurred in relation to self education.




Appendix 15:

WORK RELATED TRAVEL

DESCRIPTION An employee may salary package the cost of travel for work related purposes, which are not otherwise funded by the employer.

What is allowed? • Thecostsincurredforthetravelbyanemployeeonly.

• Conferences/seminarfees,airlinetickets,andaccommodationfortheworkrelated activities

Taxation Issues • Thecostofworkrelatedtravelis‘otherwisedeductible’andisnotreportedonthe employee’s payment summary as a fringe benefit.

• TheGoodsandServicesTaxappliestoworkrelatedtravelwithinAustralia.


• FringeBenefitsTaxdoesnotapplytoworkrelatedtravel.

Substantiation • Submittheoriginalreceipt/taxinvoiceandaclaimforreimbursementof expense incurred.

• Aletterfromtheemployersubstantiatingthebusinesstravelrequirementsmustbe submitted with each claim.

• WheretheemployeeisrequiredtostayawayfromhomewithinAustraliaformore than five (5) nights, a diary/itinerary must be maintained.

• Anyinternationaltravelmustbesubstantiatedwithadiary/itinerary.



Form of Payment Reimbursement to employee where the original receipt/tax invoice and a completed claim form has been forwarded to Maxxia.

Package Cost Cost of the work related travel expenses.




Appendix 16:

NEWSPAPERS AND PERIODICALS

DESCRIPTION An employee may salary package the cost of newspapers and periodicals where they are used for work related purposes.

The newspaper or periodical must be for use by the employee for work related purposes. If the work related purpose is merely incidental, the provision of the newspaper or periodical is not an exempt fringe benefit.

What is Allowed? The cost of the newspapers and periodicals.

Taxation Issues • ThecostofnewspapersandperiodicalsisexemptfromFBTandisnotreportedon the employee’s payment summary as a fringe benefit.

• TheGoodsandServicesTaxappliestonewspapersandperiodicals.



Substantiation Originalreceipts/taxinvoicesmustbesubmittedwhenseekingreimbursementofthe newspapers and periodicals.



Form of Payment Reimbursement to the employee where the original receipt/tax invoice and a completed claim from has been forwarded to Maxxia.

Package Cost The cost of the newspapers and periodicals.




Appendix 17:

AIRPORT LOUNGE MEMBERSHIP

DESCRIPTION An employee may elect to include in the salary package the cost of an airport lounge membership.

What is Allowed? The cost of membership.

Taxation Issues • ThecostofairportloungemembershipisexemptfromFBTandisnotdisclosedas a Reportable Fringe Benefit on the employee’s PAYG Payment Summary.

• FBTdoesnotapply.

• TheGoodsandServicesTaxappliestoairportloungemembership.


Substantiation • Originalreceiptsmustbesubmittedwhenseekingreimbursementofmembership fees.

• Originalinvoicesmustbesubmittedwhereanemployeeisseekingadirectpayment for membership fees.

• Anairportloungemembershipisnotreportedontheemployee’spaymentsummary as a fringe benefit.


Not required.

Form of Payment • Reimbursement.

• Directpayment.

Package Cost Cost of the membership fees.


Not applicable


Appendix 18:

DISABILITY AND INCOME PROTECTION INSURANCE

DESCRIPTION An employee may salary package the cost of an insurance policy for cover relating to the loss of earnings by the employee as a result of illness or disability.

What is Allowed? The cost of the insurance premium.

Taxation Issues • Thecostofthedisability/incomeprotectioninsurancepremiumisexemptfromFBT and is not reported on the employee’s payment summary as a fringe benefit.

• TheGoodsandServicesTaxappliestothecostofthedisability/incomeprotection insurance premium.



Substantiation The employee must provide evidence of the disability/income protection insurance policy and the premium amounts.


• Acompleted‘ExpensePaymentFringeBenefitDeclaration’mustbesubmittedtoMaxxia on each occasion that a reimbursement claim is made.

OR

• A‘RecurringExpensePaymentFringeBenefitDeclaration’istobesubmittedwhen a regular payment has been established.

Form of Payment • Directregularpaymentofthedisability/incomeprotectioninsurancepremium.

• Directpaymenttoathirdpartywheretheemployeesubmitstheoriginalaccount.

• Reimbursementtotheemployeewhereanoriginalreceipt/taxinvoicehasbeenprovided to Maxxia.

Package Cost Cost of the disability/income protection insurance premium.




Appendix 19:

INTEREST ONLY INVESTMENT LOAN

DESCRIPTION An employee may salary package the interest payments on an investment loan where:

The funds for the loan have been used for investment purposes to generate •income, such as purchasing shares, an investment property or stock and

The loan is through a recognised financial institution.•

What is Allowed? The repayment of the interest on the investment loan.•

The investment loan may be in the name of the employee or joint names of the •employee and partner.

The employee cannot salary package an investment loan that is linked to an •interest offset facility.

Pre tax dollars cannot be used to pay any of the principal of the loan.•

An employee can only salary package the interest component that relates to •their benficial share of the investment loan. For example, if the employee’s beneficial share of the loan is 50% of the interest paid can be salary packaged.

Taxation Issues Interest only investment loan expenses are not reported on the employee’s •payment summary as a fringe benefit.

The Goods and Services Tax does not apply to investment loans.•

Fringe Benefits Tax does not apply.•

Substantiation A copy of the loan contract and the bank/financial institution statement.•


All employees who elect to include interest only payments on an investment loan •must complete the ‘Investment Loan Interest Payment Declaration’.

The completed Declaration must be submitted to Maxxia prior to the •commencement of payments.

Form of Payment Reimbursement only.

A completed Reimbursement Claim Form with bank statements evidencing payment of interest on the loan should be sent to Maxxia.

Package Cost The cost of the loan interest payments.


Where an employee salary packages the loan repayments on an interest only loan, the employee will not be entitled to claim a tax deduction on their annual income tax return in respect of the repayments.


Appendix 20:

LIVING AWAY FROM HOME ALLOWANCE

DESCRIPTION A living away from home allowance is an allowance paid to an employee to compensate for additional expenses incurred and disadvantages suffered due to theemployeebeingrequiredtoliveawayfromtheirusualplaceofresidenceinorder to perform their duties of employment.

What is Allowed? The reasonable accommodation costs of a unit of accommodation occupied by eligible family members.

Taxation Issues • Thetaxablevalueistheamountoftheallowancepaidlessanypartoftheallowance that is reasonable compensation for:

• thecostofaccommodationoftheemployee;and/or

• additionalexpenditureonfood.

• ThetaxablevalueofthebenefitusedforthecalculationofFBTis“grossed-up”and may be included on the employee’s payment summary as a fringe benefit.


• FringeBenefitsTaxwillnotbeincurredwheretheaccommodationcostsareconsidered ‘reasonable’ and food component of the allowance does not exceed theATOGuidelinesforareasonablefoodcomponent.

Substantiation Originalreceipts/invoicesmustbesubmittedtoMaxxiawhen seeking reimbursement.


• TheemployeemustprovideasignedLivingAwayFromHomeDeclarationconfirming that their employment duties require them to live away from their usual place of residence.

• Asigned“LetterofOffer”fromRailCorpconfirmingthatyouareentitledtoinclude this benefit as a component of your salary package.

Form of Payment Reimbursement to the employee where original receipts and a completed claim form have been submitted to Maxxia.

Package Cost The cost of the allowance for accommodation and food, plus any applicable FBT.


There is no administration fee applicable for salary packaging the Living Away From Home Allowance benefit.


Appendix 21:

TAXI FARES TO AND FROM WORK

DESCRIPTION • Anemployeemaysalarypackagethecostoftaxifareswherethetravelbeginsor ends at the employee’s place of employment.

What is Allowed? • Thecostoftaxitravelbyanemployee.

Taxation Issues • TheGoodsandServicesTaxappliestotaxifares.


• TaxifaresareexemptfromFBTandarenotreportedontheemployee’spaymentsummary as a fringe benefit.

• FBTdoesnotapply.

Substantiation • Originalreceipts/taxinvoicesmustbesubmittedoneachoccasionwhenseekingreimbursement of taxi fares.


• Notrequired.

Form of Payment • Reimbursementtotheemployeewheretheoriginalreceipt/taxinvoiceandacompleted claim from has been submitted to Maxxia.

Package Cost • Thecostofthetaxifares.




Appendix 22:

PRIORITY OF ACCESS FEE FOR CHILD CARE

DESCRIPTION • Anemployeemaysalarypackagepaymentsincurredtoobtainpriorityofaccess to certain child care facilities.

What is Allowed? • ThepaymentsmustbemadeunderaprogramadministeredbytheDepartmentof Health, Housing, Local Government and Community Services to a child care service that is one of the following:

• aneligiblechildcarecentreforthepurposesofanyprovisionoftheChildCareAct1972;

• familydaycare;

• careoutsideschoolhours;or

• careinschoolvacations.

Taxation Issues • Thecostofpriorityofaccessfeeforchildcareisnotreportedontheemployee’s payment summary as a fringe benefit.

• TheGoodsandServicesTaxdoesnotapplytopriorityofaccessfees.



Substantiation • Submittheoriginalreceipt/taxinvoiceandaclaimforreimbursementofexpenseincurred.


• Notrequired.

Form of Payment • Reimbursementtoemployeewheretheoriginalreceipt/taxinvoiceandacompleted claim form has been forwarded to Maxxia.

Package Cost • Costofthepriorityofaccessfeeforchildcare.


• Notapplicable.


Appendix 23:

ELIGIBLE WORK RELATED ITEMS – TOOLS OF THE TRADE

DESCRIPTION An employee may salary package the cost of tools of trade. Tools of trade are those used by the employee in the normal course of their employment and are eligible for an income tax deduction.

What is Allowed? The tool of trade must be used primarily in the course of performing •employment related duties.

Tools of trade may include manually operated or electrically powered hand tools.•

Toolboxes and tool belts may be included.•

Major equipment, such as a lathe or drill press do not qualify under this •benefit item.

The employee is not entitled to claim a tax deduction for tools of trade that is •included in their salary package.

Taxation Issues The Goods and Services Tax applies to gas and electricity.•

Input Tax Credits are available.•

Tools of trade are exempt from FBT and are not reported on the employee’s •payment summary as a fringe benefit.

FBT does not apply.•

Substantiation Originalreceipts/taxinvoicesmustbesubmittedwhenseekingreimbursement•of expenses.

Purchase documents must be submitted that indicate the make and type of tool.•


Where the employer has agreed to continue to allow tools of trade as an available benefit after the May 2008 Federal Budget, the employee must complete the ‘Salary Packaging Claim Form for Work Related Items’.

Form of Payment Reimbursement to the employee where the original receipt/tax invoice and a completed claim from has been submitted to Maxxia.

Package Cost The cost of the tools of trade.



Railcorp Employee Information Guide

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