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Salary Packaging

Employee Information Guide

PREPARED FOR RAILCORP


SEPTEMBER 2009

CAR INSURANCE

Contents
1. 2. Introduction Salary Packaging Options 2.1 3. Eligibility 2.2 What Benefits are Available? Taxation 3.1 3.2 3.3 3.4 4. Novated Motor Vehicle Leasing Statutory Formula Method Novated Motor Vehicle Leasing Employee Contribution Method (ECM) Future Taxation Payment Summary Reporting 5 6 6 6 8 8 8 9 9 10 11 11 11 11 12 12 12 12 13 13 14 14 14 14 14 15 16 16 16 16

3.5 Reportable Employer Superannuation Contributions Administration 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 Administration of Benefit Funds Terms and Conditions Methods of Payment Reconciliation Changed Circumstances Arrangements During Leave Ending Salary Packaging Arrangements Ceasing Employment

5.

4.9 Reports Administration Cost 5.1 5.2 5.3 Package Changes Manual Claim Payments Superannuation

6. 7.

5.4 Living Away From Home Allowance Where To From Here? Further Information 7.1 7.2 7.3 Access to Website Privacy Policy Access to Your Personal Information

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Contents (continued)
Appendix 1: Appendix 2: Appendix 3: Appendix 4: Appendix 5: Appendix 6: Appendix 7: Appendix 8: Appendix 9: Appendix 10: Appendix 11: Appendix 12: Appendix 13: Appendix 14: Appendix 15: Appendix 16: Appendix 17: Appendix 18: Appendix 19: Appendix 20: Appendix 21: Appendix 22: Appendix 23: Novated Motor Vehicle Lease Associate Motor Vehicle Lease Superannuation Remote Area Rental Assistance Remote Area Reimbursement of Interest Remote Area Reimbursement on Purchasing or Building a Property Remote Area Provision of Gas / Electricity Remote Area Holiday Travel Assistance Remote Area Housing (Employer Provided) Financial Counselling Fees Home Office Expenses Professional Memberships & Subscriptions Relocation Expenses Self Education Expenses Work Related Travel Newspapers and Periodicals Airport Lounge Membership Disability and Income Protection Insurance Interest Only Investment Loan Living Away from Home Allowance Taxi Fares to and from Work Priority of Access Fee for Child Care Eligible Work Related Items Tools of the Trade 17 19 21 23 24 25 27 28 30 32 33 34 35 37 38 39 40 41 42 43 44 45 46

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Disclaimer
This 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 Maxxias 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.

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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: Making financial decisions based on before tax dollars, not after tax dollars; and Allocating salary and optional benefits to suit individual financial and personal situations. 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 employees 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 employees 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.

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2. Salary Packaging Options


In 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 Eligibility
Salary 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; Optional benefits; and Administration fee(s).

2.2 What Benefits are Available?


The following benefits are available: 1. Concessionally Taxed Benefit Items Novated Motor Vehicle Lease; Associate Motor Vehicle Lease; Contributions to Superannuation; Remote Area Rental Assistance; Remote Area Reimbursement of Interest; Remote Area Reimbursement on Purchasing or Building a Property; Remote Area Provision of Gas / Electricity; and Remote Area Holiday Travel Assistance 2. FBT Free Benefit Items Remote Area Housing (Employer provided); Financial Counselling Fees; Home Office Expenses; Professional Memberships and Subscriptions; Relocation Expenses; Self Education Expenses; Work Related Travel; Newspapers and Periodicals; Airport Lounge Membership; Disability Income Protection Insurance; Interest Only Investment Loan; Living Away from Home Allowance;

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Taxi Fares to and from Work; Priority of Access Fee for Child Care; and Tools of Trade. 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.

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3. Taxation
The 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 employers salary packaging policy falls into one of the following three (3) FBT categories: 1. FBT exempt items; 2. Concessionally taxed items (e.g. novated motor vehicle leasing); and 3. Full FBT.

3.1 Novated Motor Vehicle Leasing Statutory Formula Method


Motor 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)


Less than 15,000 15,000 to 24,999 25,000 to 40,000 Over 40,000

Statutory percentage
26% 20% 11% 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= B= C= D= E=

the cost value of the car the statutory percentage the number of days in the FBT year when the car was used or available for private use of the employee the number of days in the FBT year 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 posttax salary, and/or an aftertax 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 employers payroll system. The employee meets the aftertax running costs of the vehicle (fuel, insurance, repairs and maintenance) and in some cases an aftertax 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.
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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 pretax salary and $5,000 from aftertax salary. Where the employee makes an aftertax 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 Taxation


The 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 employees 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 employees 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: Child support obligations; Higher Education Loan Program (HELP/HECS) repayment; Medicare levy surcharge; Personal superannuation contributions Rebate; and Rebate for Spouse Superannuation Contributions.

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3.5 Reportable Employer Superannuation Contributions


From 1 July 2009, additional superannuation contributions made under a salary sacrifice arrangement will be reported on an employees annual payment summary. These contributions are referred to as reportable employer superannuation contributions. The reportable employer superannuation contributions are not included in an employees 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. Only the actual amounts of contributions made are reported. 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 employees payment summary.

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4. Administration
The 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: Payment of the selected benefit item(s) in accordance with instructions provided by the employee in the Salary Application Form; Provision of reports to employees; Undertaking full reconciliation of salary packages; Obtaining and storing benefit payment substantiation for Australian Taxation Office compliance and audit purposes; Communicating directly with employees in relation to salary packaging; and Answering queries in relation to salary packaging. 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 Funds


Upon commencement of salary packaging the following will be deducted on a pro-rata basis from the employees salary: The cost of the selected optional benefit(s); Any FBT applicable to these benefits; and The administration cost. 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 Conditions


The following terms and conditions will apply: Benefit payments will only be made where Maxxia has received a salary package deduction; Where insufficient package funds are available to cover a payment, no benefit payment will be made; Unless alternative arrangements have been made, all benefit payments will cease immediately an employee ceases employment with RailCorp or is suspended without pay or commences on leave without pay; and An employee may request for any unspent funds to be returned to the employee through the payroll system 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. Name and address of where payments should be made; Frequency of the payments;
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Payment amount; Commencement date for regular payments; and BSB and account number for regular direct EFT and payments.

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 employees 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 employees request. Please note that the bank may take another few days to clear funds.

4.4 Reconciliation
A reconciliation of the salary package will occur when an employee alters their salary package. Any balance remaining in an employees salary package on termination of employment will be paid as salary and taxed accordingly. Where Maxxia pays any expense that relates to the employees salary package, which is in excess of the amount nominated, the employee will be required to repay such an expense.

4.5 Changed Circumstances


An 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 Leave


Salary packaging arrangements will continue to be deducted from an employees 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 Notifying Maxxia prior to the leave, where possible if the leave will affect salary packaging arrangements and Making their own payments to meet any commitments under salary packaging arrangements. An employee who wishes to resume salary packaging payments after a period of unpaid leave is also responsible for informing the fund or organisation to which payments are to be made; and making the necessary arrangements through Maxxia, as appropriate.

4.7 Ending Salary Packaging Arrangements


An 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 employees 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.

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Any additional costs incurred as a result of termination of an employees salary package arrangements must be paid by the employee and will be deducted from the employees 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 Employment


Upon ceasing employment, an employees 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 Reports
Employees 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 shows the packaging account balance at the time of accessing the report; 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.

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

Administration Fee Description


Salary packaging one FBT free benefit Item by a Participating Employee. Salary packaging one or more benefits (excluding a novated motor vehicle lease) by a Participating Employee. Salary packaging a novated motor vehicle lease only by a Participating Employee. Salary packaging a combination of benefits including a novated motor vehicle lease by a Participating Employee. The supply of the Vehicle Management Service to a Participating Employee (other than the issue of a fuel card)

Annual Fee (Including GST)


$55.00 $110.00 $210.00 $210.00 $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 Changes


An 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 Payments


An 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 Superannuation
All 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.

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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. Or you can complete the Salary Packaging Application Form and forward directly to Maxxia at the following address: Maxxia Pty Ltd Locked Bag 18 Collins Street East MELBOURNE VIC 8003 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).

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7. Further Information
A 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 Website


General 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: PASSWORD: RAILCORP 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 Policy


Maxxia 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. Maxxias 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 Information


Under 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: The Privacy Officer Maxxia Pty Ltd Locked Bag 18 Collins Street East Melbourne VIC 8003 Or email Maxxia at privacy@maxxia.com.au 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.
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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 employers guidelines. You must use your employers Deed of Novation, which is available from Maxxia.

What is Allowed?

Direct Lease payments. Running costs (eg fuel, insurance, registration, servicing, maintenance and tyres). The cost of stamp duty and other costs related to the purchase of the motor vehicle can only be salary packaged as part of the lease cost, i.e. not as running costs.

Restrictions

Where capital improvements are made to the motor vehicle (eg sunroof, CD player) after the commencement of the lease, these items cannot be included in the salary package. V8 powered vehicles cannot be salary packaged.

Employee Contribution Method

The Employee Contribution Method (ECM) enables an employee to reduce the FBT of a novated motor vehicle to nil by making a post tax contribution to the operating costs of the vehicle. The amount of employees contribution required must be equal to the taxable value 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

The Goods and Services Tax does not apply to Motor Vehicle Registration, but does apply to the component relating to compulsory third party insurance. Input Tax Credits are available. The cost of a novated motor vehicle salary packaged are grossed up and may be included on the employees payment summary. Where the employee adopts the ECM and reduces the FBT on the motor vehicle to Nil, the benefit will not be included on the employees payment summary. Maxxia will contact each employee with a motor vehicle lease in September 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 employees FBT/ECM contributions from their salary package. In addition where a declaration is not received Maxxia will notify the employer for appropriate action. Each Employee will be required to lodge an end of FBT year odometer reading with 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.

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Substantiation

Deed of Novation (signatory page and front page of lease, including the execution date, only required). Copy of the finance schedule from the finance lease. Dealer invoice for the purchase price of the motor vehicle. Original invoices must be submitted where an employee is seeking a direct payment for registration or insurance. At the end of each FBT year the employee is required to provide a declaration in relation to the opening and closing odometer readings for the number of kilometres travelled during the FBT year.

Employee Declaration

Where the odometer reading declaration is not provided by the employee at the end 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 Motor Vehicle-Fuel and Oil Expenses Declaration will be required where payments towards the running costs are being claimed to reduce the taxable value of the motor vehicle.

Form of Payment Additional Information

Lease payments made directly to financier. Motor vehicle charge card fuel and maintenance. Where input tax credits are available, a tax invoice must be submitted with the claim form.

Further Information about Novated Leasing Maxxia Pty Ltd Telephone: 1300 123 123 Fax: 1300 733 444 Email: mycar@maxxia.com.au

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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. Direct lease payments. Running costs (eg fuel, insurance, registration, servicing, maintenance and tyres) The cost of stamp duty and other costs related to the purchase of the motor vehicle can only be salary packaged as part of the lease cost, i.e.: not as running costs.

What is Allowed?

Restrictions

Where capital improvements are made to the motor vehicle (e.g. sunroof, cd player) after the commencement of the lease, these items cannot be included in the salary package. V8 powered vehicles cannot be salary packaged.

Substantiation

Copy of Associate Lease documentation. Dealers invoice evidencing the purchase price of the motor vehicle if the vehicle is purchased at the commencement of the Associate Lease. Independent valuation of the motor vehicle if the vehicle is already owned or being purchased by the associate prior to the commencement of the associate lease. Original receipts must be submitted for reimbursement of running costs incurred by the employee where a fuel card is not used. Original invoices must be submitted where an employee is seeking a direct payment for registration or insurance.

Taxation Issues

Concessional FBT applies and is calculated by using the statutory formula method. The Goods and Services Tax does not apply to Motor Vehicle Registration, but does apply to the component relating to compulsory third party insurance. Input Tax Credits are available. The cost of a novated motor vehicle salary packaged are grossed up and may be included on the employees payment summary. Where the employee adopts the ECM and reduces the FBT on the motor vehicle to Nil, the benefit will not be included on the employees payment summary. Maxxia will contact each employee with a motor vehicle lease in September 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 employees FBT/ECM contributions from their salary package. In addition where a declaration is not received Maxxia will notify the employer for appropriate action.

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Taxation Issues (continued)

Each employee will be required to lodge an end of FBT year odometer reading with 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. The lodgement of the end of FBT year odometer reading is done via the Maxxia automated telephone odometer reading service.

Employee Declaration

Where the odometer reading declaration is not provided by the employee at the end 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 Motor Vehicle-Fuel and Oil Expenses Declaration will be required where payments towards the running costs are being claimed to reduce the taxable value of the motor vehicle. Repayment of any FBT incurred is the responsibility of the employee.

Form of Payment

Lease payments made directly to the associate. Motor vehicle charge card fuel and maintenance.

Package Cost Additional Information

Lease payments, running costs and Fringe Benefits Tax. The associate party in an associate lease arrangement is strongly encouraged to take their own professional advice in relation to the financial, taxation and legal considerations for them in participating in the associate lease transaction. Where input tax credits are available, a tax invoice must be submitted with the claim form.

Further Information about Associate Leasing Maxxia Pty Ltd Telephone: 1300 123 123 Fax: 1300 733 444 Email: mycar@maxxia.com.au

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Appendix 3:
SUPERANNUATION
DESCRIPTION
An employee may salary package additional superannuation contributions to a complying superannuation fund. A complying superannuation fund must be registered and comply with the requirements of the Australian Prudential Regulatory Authority and Australian Taxation Office. Employees should note that Commonwealth legislation may restrict an employees access to superannuation contributions under a salary packaging arrangement until the employee reaches a prescribed preservation age. Contributions to the superannuation fund can only be made on behalf of the employee. Contributions cannot be made on behalf of the employees spouse. First State Super (FSS) Employees who currently have a superannuation account opened with First State Super can have their salary packaging contributions to superannuation paid into that account. Salary packaged superannuation contributions can be changed once each FBT year (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. In order to salary package contributions to First State Super (FSS) please contact Maxxia on 1300 123 123. State Authorities Superannuation Scheme (SASS) and State Superannuation Scheme (SSS) Employees who are members of SASS or SSS may salary package their compulsory personal superannuation contributions either: entirely from their before-tax salary or from a combination of before-tax and after-tax salary. Additional contributions cannot be paid into SASS and SSS under salary packaging arrangements because of restrictions imposed by rules of the SASS and SSS funds. SASS and SSS members who wish to salary package their compulsory personal superannuation contributions should: seek professional financial advice about the implications of doing this before changing 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 funds required deadlines. In order to salary package contributions into SASS or SSS please contact Business Services Payroll at RailCorp. More information on salary sacrificing FSS can be found at www.firststatesuper.com.au SASS and SSS compulsory personal contributions can be found at www. statesuper.nsw.gov.au

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Taxation Issues

Superannuation contributions salary packaged are not reported on the employees payment summary as a fringe benefit. Salary packaged superannuation payments are subject to a Contribution Tax of 15% that is deducted by the superannuation fund and remitted to the Australian Taxation Office. The Goods and Services Tax does not apply to superannuation payments. Input Tax Credits are not available. Fringe Benefits Tax does not apply.

Form of Payment Package Cost Additional Information

Regular payment made directly to the superannuation fund. Non-regular payments can also be made to the superannuation fund. Cost of the superannuation contribution from salary package. Superannuation payments made by an employee to the superannuation fund cannot be reimbursed. All administration fees associated with the salary packaging of Superannuation will be paid by RailCorp.

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Appendix 4:
REMOTE AREA RENTAL ASSISTANCE
DESCRIPTION
An employee may salary package their private rental payments where: The accommodation is in a prescribed remote area; The accommodation is the employees usual place of residence; The employee is a current employee; and The FBT requirements for the FBT concession are met.

What is Allowed? Taxation Issues

50% of rental, less any reimbursement received from the employer, incurred on accommodation in a prescribed remote area. The taxable value of the rental will be reduced by 50%, and FBT applied accordingly. The Goods and Services Tax does not apply. Input Tax Credits are not available. The taxable value of remote area housing rental is grossed-up and may be reported on the employees payment summary as a fringe benefit.

Substantiation

For administrative purposes, Maxxia will not make the decision on 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 Package Cost Calculation

Regular reimbursement to the employee where proof of payment has been provided. The cost of the annual rental plus the applicable FBT. 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

Additional Information

Not applicable.

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Appendix 5:
REMOTE AREA REIMBURSEMENT OF INTEREST
DESCRIPTION
An employee may salary package the interest payments accrued on a housing loan provided: The accommodation is in a prescribed remote area; The accommodation is the employees usual place of residence; The employee is a current employee; and The FBT requirements for the FBT concession are met. Note, this benefit does not provide for the payment of loan repayments.

What is Allowed? Taxation Issues

Interest, less any reimbursement received from the employer, incurred on a housing loan for accommodation is a prescribed remote area. The taxable value of the interest on the housing loan will be reduced by 50%, and the FBT calculated accordingly. The Goods and Services Tax does not apply. Input Tax Credits are not available. The Remote Area Reimbursement of Interest fringe benefit is grossed-up and may be reported on the employees payment summary as a fringe benefit.

Substantiation

For administrative purposes, Maxxia will not make the decision on 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

Reimbursement only. A completed Remote Area Housing Assistance Reimbursement of Interest form must be submitted to Maxxia.

Package Cost Calculation

The cost of the interest per annum plus the applicable FBT. Total package cost = Interest cost + (Interest cost x 0.4346). 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

Additional Information

Not applicable.

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Appendix 6:
REMOTE AREA REIMBURSEMENT ON PURCHASING OR BUILDING A PROPERTY
DESCRIPTION
An employee may salary package the costs incurred on: the purchase of a property in a prescribed remote area; the purchase of land to build a home in a prescribed remote area; the deposit and principal provided the FBT requirements for the FBT concession are met.

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. 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 employees 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 immediately after settlement; 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.

Taxation Issues

Substantiation

Copy of Offer and Acceptance and Settlement Statement showing the purchase 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 Package Cost

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

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Example
Note: 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
Salary Rental payment FBT Administration fee Input tax credits Net Salary Tax & Medicare Net Salary Interest/Rent/Purchase Net Cash Salary Net Benefit

No Packaging
$120,000 $0 $0 $0 $0 $120,000 ($34,850) $85,150 ($20,000) $65,150 n/a

Packaging
$120,000 ($20,000) ($8,692) ($280) $25 $91,003 $91,003 $67,607 $0 $67,607 $2,457

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Appendix 7:
REMOTE AREA PROVISION OF GAS/ELECTRICITY
DESCRIPTION What is Allowed?
An employee residing in a prescribed remote area may salary package the cost of gas and electricity. The cost of the gas and electricity. An employee cannot salary package any expenses that have been reimbursed by the employer.

Taxation Issues

The taxable value of the gas or electricity payment will be reduced by 50%, and FBT applied accordingly. The Goods and Services Tax applies to gas and electricity. Input Tax Credits are available. The taxable value of remote area gas and electricity is grossed-up and may be reported on the employees payment summary as a fringe benefit.

Substantiation Employee Declaration Form of Payment Package Cost Additional Information

Original receipts/tax invoices must be submitted when seeking reimbursement of expenses. Not required.

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

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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. The expenses that may be salary packaged are: Air fares; Meals (en route only); Accommodation; Travel to and from the holiday destination in the employees own car; Hire car and hire car costs; and Any costs associated with the transport to and from the holiday destination. Expenses will be reimbursed in respect of the employee, their spouse (including a defacto spouse) and their children. Expenses for which the employee has received reimbursement from their employer cannot be salary packaged. Employees are not to include requests for payments directly to third parties. The employee must make the payment and then seek reimbursement from Maxxia. False claims for reimbursement will be referred to the employer and the employee may be denied further access to the salary packaging program.

What is Allowed?

Taxation Issues

The FBT payable is dependent upon the employees point of hire (as listed in their employment agreement) and their destination. The estimated amount of FBT will be calculated at the time of establishing the employees salary package and deducted from the employees pre-tax salary in addition to the cost of the chosen benefit. The taxable value of Remote Area Holiday Travel Assistance is grossed-up and may included reported on the employees payment summary as a fringe benefit. The Goods and Services Tax applies to travel within Australia. Input Tax Credits are available. FBT applies to the cost of remote area holiday travel assistance.

Substantiation Employee Declaration

Original receipts/tax invoices must be submitted when seeking reimbursement of expenses. Not required.

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Form of Payment

The employee must submit a completed Remote Area Holiday Travel Assistance Claim form. For each expense included on the claim form, the employee must: provide the merchant name, payment description, date of payment and the payment amount (including GST); and attach the original receipt/tax invoice. Reimbursements of payments made by credit card will only be made where original receipts/tax invoices are submitted with the claim form. Credit card statements are not sufficient substantiation and will not be accepted by Maxxia. Maxxia will not make partial payments of an amount claimed. It is extremely important 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 Additional Information

The cost of the Remote Area Holiday Travel Assistance payments plus the applicable FBT. Where input tax credits are available, a tax invoice must be submitted with the claim form.

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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 the FBT requirements for the FBT exemption must be met. 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.

What is Allowed?

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 employees 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 Package Cost

The payment of this benefit will be made directly by EFT to the employer in accordance with the salary payment cycle. The cost to the salary package will be the annual cost of the rental.

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Example
Note: 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
Salary Rental payment FBT Administration fee Input tax credits Net Salary Tax & Medicare Net Salary Interest/Rent/Purchase Net Cash Salary Net Benefit

No Packaging
$120,000 $0 $0 $0 $0 $120,000 ($34,850) $85,150 ($20,000) $65,150 n/a

Packaging
$120,000 ($20,000) ($8,692) ($280) $25 $91,003 $91,003 $67,607 $0 $67,607 $2,457

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Appendix 10:
FINANCIAL COUNSELLING FEES
DESCRIPTION What is Allowed? Taxation Issues
An employee may salary package the cost of the provision of salary packaging advice from a financial adviser, or accountant. The professional fees charged by the adviser or accountant to the employee in relation to the provision of the advice. Financial counselling fees are otherwise deductible and are not reported on the employees payment summary as a fringe benefit. The Goods and Services Tax applies to financial counselling fees. Input Tax Credits are available. Fringe Benefits Tax does not apply.

Substantiation Employee Declaration Form of Payment Package Cost Additional Information

Submit the original receipt/tax invoice and a claim for reimbursement of expense incurred A completed Expense Payment Fringe Benefit Declaration must be submitted to Maxxia on each occasion that a reimbursement claim is made. Reimbursement to the employee where the original receipt/tax invoice and a completed claim from has been forwarded to Maxxia. The cost of the professional fees. Where input tax credits are available, a tax invoice must be submitted with the claim form.

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Appendix 11:
HOME OFFICE EXPENSES
DESCRIPTION What is Allowed?
An employee may salary package the cost of certain expenses related to the employee undertaking work related activities at their home. Expenses associated with home working facilities may include stationery, a leased or rented computer or similar business equipment such as a facsimile, filing cabinet and photocopier. Repairs, maintenance and software expenses related to a computer may be included within the salary package. Expenses of a capital, private or domestic nature cannot be included in the salary package.

Taxation Issues

Home office expenses are otherwise deductible and are not disclosed as a Reportable Fringe Benefit on the employees PAYG Payment Summary. The Goods and Services Tax applies to home office expenses. Input Tax Credits are available. Fringe Benefits Tax does not apply.

Substantiation Employee Declaration Form of Payment Package Cost Additional Information

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. Reimbursement to employee where the original receipt/tax invoice tax invoice and a completed claim form has been forwarded to Maxxia. Cost of the home office expenses. Where input tax credits are available, a tax invoice must be submitted with the claim form.

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Appendix 12:
PROFESSIONAL MEMBERSHIPS & SUBSCRIPTIONS
DESCRIPTION
An employee may salary package the cost of professional memberships. A professional association is defined as an organisation with the sole purpose of enhancing the interests of the members of a particular profession, trade or occupation.

What is allowed? Taxation Issues

Payment of annual or periodical membership fees. Where the professional memberships and subscriptions are work-related they are not disclosed as a Reportable Fringe Benefit on the employees PAYG Payment Summary. The Goods and Services Tax of 10% applies to the cost of professional memberships and subscription fees. Input Tax Credits are available. Fringe Benefits Tax does not apply.

Substantiation

An employee must submit the original account for direct payment of membership fees. An employee must submit the original receipt for reimbursement of expenses incurred by the employee in relation to this benefit item.

Employee Declaration Form of Payment

The Expense Payment Fringe Benefit Declaration in the salary packaging application form must be completed and submitted prior to the commencement of payments/reimbursements. Direct payment to a third party where the employee submits the original account. Reimbursement to the employee where an original receipt(s) have been forwarded to Maxxia.

Package Cost Additional Information

Cost of fees and/or subscription. Requests for reimbursements/direct payments will only be processed where original receipts/invoices have been forwarded with claims.

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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. Relocation travel costs, including meals and accommodation en route, of the employee and family members. The cost of removal of furniture and personal effects, including insurance and storage. The costs of temporary accommodation, both at the old locality and the new locality. The cost of leasing furniture for the temporary accommodation. The cost of connecting telephone, electricity or gas services to the temporary accommodation. Necessary meal costs at a hotel, motel or restaurant (in excess of $2 per meal per adult or $1 per child under 12 years). Advances to cover such items as a rental bond or electricity or gas deposits, provided the advance is repayable within one year. Home sale and purchase costs, including stamp duty, legal fees and estate agents commission.

What is Allowed?

Taxation Issues

The cost of relocation expenses are not reported on the employees payment summary as a fringe benefit. The Goods and Services Tax applies to relocation costs where incurred within Australia. Input Tax Credits are available. Fringe Benefits Tax does not apply to relocation expenses.

Substantiation Employee Declaration Form of Payment

Submit original receipt/invoice for reimbursement of the expense incurred by the employee. Not required.

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. Relocation travel costs, including meals and accommodation en route, of the employee and family members. The cost of removal of furniture and personal effects, including insurance and storage. The costs of temporary accommodation, both at the old locality and the new locality. The cost of leasing furniture for the temporary accommodation. The cost of connecting telephone, electricity or gas services to the temporary accommodation.

Package Cost

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Package Cost (continued)

Necessary meal costs at a hotel, motel or restaurant (in excess of $2 per meal per adult or $1 per child under 12 years). Advances to cover such items as a rental bond or electricity or gas deposits, provided the advance is repayable within one year. Home sale and purchase costs, including stamp duty, legal fees and estate agents commission.

Additional Information

The cost of relocation expenses are not reported on the employees payment summary as a fringe benefit. The Goods and Services Tax applies to relocation costs where incurred within Australia. Input Tax Credits are available. Fringe Benefits Tax does not apply to relocation expenses.

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Appendix 14:
SELF EDUCATION EXPENSES
DESCRIPTION What is allowed?
An employee may salary package the cost of work related self education expenses. The cost of a prescribed course of education including any textbooks or equipment relevant to the course of study. Registration fees incurred in relation to work related conferences and/or seminars. Payments to the Higher Education Loan Program (HELP/HECS) cannot be included under self education expenses.

Taxation Issues

Where the self education expenses are work related they are not reported on the employees payment summary as a fringe benefit. The Goods and Services Tax does not apply to most self education expenses. Input Tax Credits are not available. Fringe Benefits Tax does not apply where the self education expenses are work related.

Substantiation Employee Declaration Form of Payment Package Cost Additional Information

Submit the original receipt/tax invoice and a claim for reimbursement of expense incurred. A completed Expense Payment Fringe Benefit Declaration must be submitted to Maxxia on each occasion that a reimbursement claim is made. Reimbursement to employee where the original receipt/tax invoice and a completed claim form has been forwarded to Maxxia. Cost of the allowable expenses incurred in relation to self education. Where input tax credits are available, a tax invoice must be submitted with the claim form.

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Appendix 15:
WORK RELATED TRAVEL
DESCRIPTION What is allowed?
An employee may salary package the cost of travel for work related purposes, which are not otherwise funded by the employer. The costs incurred for the travel by an employee only. Conferences/seminar fees, airline tickets, and accommodation for the work related activities

Taxation Issues

The cost of work related travel is otherwise deductible and is not reported on the employees payment summary as a fringe benefit. The Goods and Services Tax applies to work related travel within Australia. Input Tax Credits are available. Fringe Benefits Tax does not apply to work related travel.

Substantiation

Submit the original receipt/tax invoice and a claim for reimbursement of expense incurred. A letter from the employer substantiating the business travel requirements must be submitted with each claim. Where the employee is required to stay away from home within Australia for more than five (5) nights, a diary/itinerary must be maintained. Any international travel must be substantiated with a diary/itinerary.

Employee Declaration Form of Payment Package Cost Additional Information

A completed Expense Payment Fringe Benefit Declaration must be submitted to Maxxia on each occasion that a reimbursement claim is made. Reimbursement to employee where the original receipt/tax invoice and a completed claim form has been forwarded to Maxxia. Cost of the work related travel expenses. Where input tax credits are available, a tax invoice must be submitted with the claim form.

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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? Taxation Issues

The cost of the newspapers and periodicals. The cost of newspapers and periodicals is exempt from FBT and is not reported on the employees payment summary as a fringe benefit. The Goods and Services Tax applies to newspapers and periodicals. Input Tax Credits are available. Fringe Benefits Tax does not apply.

Substantiation Employee Declaration Form of Payment Package Cost Additional Information

Original receipts/tax invoices must be submitted when seeking reimbursement of the newspapers and periodicals. A completed Expense Payment Fringe Benefit Declaration must be submitted to Maxxia on each occasion that a reimbursement claim is made. Reimbursement to the employee where the original receipt/tax invoice and a completed claim from has been forwarded to Maxxia. The cost of the newspapers and periodicals. Where input tax credits are available, a tax invoice must be submitted with the claim form.

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Appendix 17:
AIRPORT LOUNGE MEMBERSHIP
DESCRIPTION What is Allowed? Taxation Issues
An employee may elect to include in the salary package the cost of an airport lounge membership. The cost of membership. The cost of airport lounge membership is exempt from FBT and is not disclosed as a Reportable Fringe Benefit on the employees PAYG Payment Summary. FBT does not apply. The Goods and Services Tax applies to airport lounge membership. Input Tax Credits are available.

Substantiation

Original receipts must be submitted when seeking reimbursement of membership fees. Original invoices must be submitted where an employee is seeking a direct payment for membership fees. An airport lounge membership is not reported on the employees payment summary as a fringe benefit.

Employee Declaration Form of Payment Package Cost Additional Information

Not required.

Reimbursement. Direct payment. Cost of the membership fees. Not applicable

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Appendix 18:
DISABILITY AND INCOME PROTECTION INSURANCE
DESCRIPTION What is Allowed? Taxation Issues
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. The cost of the insurance premium. The cost of the disability/income protection insurance premium is exempt from FBT and is not reported on the employees payment summary as a fringe benefit. The Goods and Services Tax applies to the cost of the disability/income protection insurance premium. Input Tax Credits are available. Fringe Benefits Tax does not apply.

Substantiation Employee Declaration

The employee must provide evidence of the disability/income protection insurance policy and the premium amounts. A completed Expense Payment Fringe Benefit Declaration must be submitted to Maxxia on each occasion that a reimbursement claim is made. OR A Recurring Expense Payment Fringe Benefit Declaration is to be submitted when a regular payment has been established.

Form of Payment

Direct regular payment of the disability/income protection insurance premium. Direct payment to a third party where the employee submits the original account. Reimbursement to the employee where an original receipt/tax invoice has been provided to Maxxia.

Package Cost Additional Information

Cost of the disability/income protection insurance premium. Where input tax credits are available, a tax invoice must be submitted with the claim form.

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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 employees 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 employees payment summary as a fringe benefit. The Goods and Services Tax does not apply to investment loans. Fringe Benefits Tax does not apply.

Substantiation Employee Declaration

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 Additional Information

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.

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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 the employee being required to live away from their usual place of residence in order to perform their duties of employment. The reasonable accommodation costs of a unit of accommodation occupied by eligible family members. The taxable value is the amount of the allowance paid less any part of the allowance that is reasonable compensation for: the cost of accommodation of the employee; and/or additional expenditure on food. The taxable value of the benefit used for the calculation of FBT is grossed-up and may be included on the employees payment summary as a fringe benefit. The Goods and Services Tax does not apply. Fringe Benefits Tax will not be incurred where the accommodation costs are considered reasonable and food component of the allowance does not exceed the ATO Guidelines for a reasonable food component.

What is Allowed? Taxation Issues

Substantiation Employee Declaration

Original receipts/invoices must be submitted to Maxxia when seeking reimbursement. The employee must provide a signed Living Away From Home Declaration confirming that their employment duties require them to live away from their usual place of residence. A signed Letter of Offer from RailCorp confirming that you are entitled to include this benefit as a component of your salary package.

Form of Payment Package Cost Additional Information

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

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Appendix 21:
TAXI FARES TO AND FROM WORK
DESCRIPTION What is Allowed? Taxation Issues
An employee may salary package the cost of taxi fares where the travel begins or ends at the employees place of employment. The cost of taxi travel by an employee. The Goods and Services Tax applies to taxi fares. Input Tax Credits are available. Taxi fares are exempt from FBT and are not reported on the employees payment summary as a fringe benefit. FBT does not apply.

Substantiation Employee Declaration Form of Payment Package Cost Additional Information

Original receipts/tax invoices must be submitted on each occasion when seeking reimbursement of taxi fares. Not required.

Reimbursement to the employee where the original receipt/tax invoice and a completed claim from has been submitted to Maxxia. The cost of the taxi fares. Where input tax credits are available, a tax invoice must be submitted with the claim form.

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Appendix 22:
PRIORITY OF ACCESS FEE FOR CHILD CARE
DESCRIPTION What is Allowed?
An employee may salary package payments incurred to obtain priority of access to certain child care facilities. The payments must be made under a program administered by the Department of Health, Housing, Local Government and Community Services to a child care service that is one of the following: an eligible child care centre for the purposes of any provision of the Child Care Act 1972; family day care; care outside school hours; or care in school vacations.

Taxation Issues

The cost of priority of access fee for child care is not reported on the employees payment summary as a fringe benefit. The Goods and Services Tax does not apply to priority of access fees. Input Tax Credits are not available. Fringe Benefits Tax does not apply.

Substantiation Employee Declaration Form of Payment Package Cost Additional Information

Submit the original receipt/tax invoice and a claim for reimbursement of expense incurred. Not required.

Reimbursement to employee where the original receipt/tax invoice and a completed claim form has been forwarded to Maxxia. Cost of the priority of access fee for child care. Not applicable.

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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. 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.

What is Allowed?

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 employees payment summary as a fringe benefit. FBT does not apply.

Substantiation

Original receipts/tax invoices must be submitted when seeking reimbursement of expenses. Purchase documents must be submitted that indicate the make and type of tool.

Employee Declaration Form of Payment Package Cost Additional Information

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. Reimbursement to the employee where the original receipt/tax invoice and a completed claim from has been submitted to Maxxia. The cost of the tools of trade. Where input tax credits are available, a tax invoice must be submitted with the claim form.

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