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Salary packaging and Taxation - Essay Example
Author : hertha40
Finance & Accounting
Pages 21 (5271 words)
Tutor Course 26th September 2012 SALARY PACKAGING Question 2 Part A Salary packaging, also called salary sacrifice is an arrangement whereby an employee’s total monetary remuneration for performing employment duties is taken in the form of cash and benefits instead of being paid wholly in the form of salaries or wages (Colin, 2012)…
Fringe benefits tax will apply to both Chris and his employer for this agreement during the FBT year that begins in 1st April 2011 up to 31st March 2012. Superannuation is money put in for a person's retirement. Strict government policy prevent untimely access to conserved benefits except in extremely limited and constrained circumstances, as well as severe financial adversity or on a compassionate basis, such as for medical cure not obtainable through Medicare. Usually, superannuation benefits are in three categories: conserved benefits; restricted non-conserved benefits; and unhindered non-preserved benefits. Mainly superannuation is concessionary taxed at a level charge of 15% at two key points: on contributions, and on salary. Capital Gain Tax inside the fund though is taxed at a charge of 10% if the properties held for longer than twelve months. Contributions whether in the type of employer superannuation, or associate salary sacrifice are levied at this rate. In the majority of the industry funds, the salary tax is paid prior to profits are disbursed to associates so it appears as a lesser level of interest on the worker’s statement. From the time when it was introduced, employers have been obligated to make compulsory contributions to superannuation in place of the majority of their workers. ...