As Chief Executives were advised on 7 September 1990, the Premier has approved of new expense payment benefit options for SES officers to apply from 1 October 1990. The purpose of this circular is to provide additional information to assist in the administration of these options and to provide advice on changes to motor vehicle costs effective 1 October 1990.

The new options are as follows:

a) Aged Care

Payments may be made for the care of an elderly relative by an approved third party. This benefit is designed for payments to recognised public or private sector providers of support, accommodation, health or welfare services and not to other family members. These services may be provided in the person's home or in an external facility.

b) Educational Expenses

Payments may be made to a third-party for current educational expenses incurred for education of a family member or for self-education.

This benefit applies to pre-school, school or educational institution term fees, music and sport tuition fees but does not cover books, uniforms, equipment or other school expenses.

In terms of self education expenses, these may not be subject to Fringe Benefits Tax. If the expenses were deductible to individuals then under the "otherwise deductible" rule they would be FBT exempt. The individual, of course, would not be able to claim them as an income tax deduction if the expenses are actually paid by the agency as employer. Certification by the executive that the expenses would be "otherwise deductible" may be required. This arrangement is similar to that applying to professional association fees.

The payment of the Higher Education Contribution which is not a work related personal income tax deduction can be paid from the package and subject to FBT. Where HECS charges are paid directly by the agency or executives have an outstanding HECS liability please refer to Premier's Memoranda 89-18 and 90-6.

This option does not extend to payments to education funds or similar savings schemes, that allow the accrual of monies in preparation for educational expenses.

c) Transport Expenses

This benefit is intended to provide for tile payment of periodic bus and rail fares. Payments to a third-party for routine transport expenses by any family member can be made. This benefit is not meant to replace or supplement existing travel or car benefits. Where free or concessional travel is already provided this should be discontinued, and public transport travel claimed should be fully costed and Fringe Benefits Tax paid.

Each agency should determine the administration policy for this item but it is recommended that individual claims be restricted to a set dollar amount such as $100, thus encouraging SES officers to avail themselves of the discounts offered for quarterly and annual passes.

Use of taxis is also included in this benefit option. Agencies should similarly determine administrative procedures in this regard.

d) Child Care

Extension to the existing benefit has been approved to allow for child care provided .by a third-party in the home. This benefit does not cover payments to a family member or dependent, but to a recognised carer such as a nanny providing child care in the home.

This benefit option has also been extended to include child maintenance payments currently provided to the Commonwealth Child Support Agency. A parent may elect to make payments to the Child Support Agency, where eligible to do so within the family law and child support legislation, and have the Department/Agency make direct payments on their behalf. New entry into the scheme would require private specialist legal assistance which cannot be reimbursed under this option. Once approved for admission into the scheme direct payments can commence to the CSA. Background information on the scheme is available from the SES Unit or directly from the Child Support Agency at Chatswood.

This benefit is not designed to cover direct payments to children, spouses or other family members.

General Remarks

Chief Executives are reminded that the total of benefit options must not exceed 50% of the total remuneration package. Each of the new options is subject to Fringe Benefits Tax of 47%, which is to be deducted from the package with each instalment to the expense payment benefit account. As you are aware Fringe Benefits Tax is oril payable on expense payments actually incurred in the FBT year. Payment of fringe Benefits Tax must be carefully monitored to ensure that the correct amounts are being paid.

Each of the benefits may be administered by payment directly to the third party providing the service, or by reimbursement to the executive upon presentation of appropriate proof of payment. Reimbursement however can only be made for these new benefits where services provided date from 1 October 1990. Payments made prior to that date cannot be reimbursed.

It is expected that individual agencies will already have adopted appropriate policies and procedures to administer expense payment benefit options.

When the Senior Executive Service was first established, new officers were able to receive remuneration advice from a panel of approved private remuneration advisers. With the addition of the new benefits, it would be appropriate for advice to be made available to executives wishing to change their schedule of benefits. This advice may be obtained from any remuneration consultant selected by your agency, with the cost of the initial consultation (generally one hour) met by your agency.

The TOPFLEX program that was specifically written to assist executives determine the components of their total remuneration package is being modified to reflect the new benefit options. The program contains other enhancements together with an additional module that has been developed by TPF&C to assist agencies in the administration of executive's benefits. It is recommended that agencies purchase sufficient copies of TOPFLEX to assist executives in reviewing their packages. All enquiries on the upgraded TOPFLEX or the new administrators module should be directed to John McKinnon at Towers Perrin on 02-229.5435.

Further advice will also be available shortly in the form of a book "Gaining Most Advantage from Your Remuneration Package" written by Daryl Dixon for the Premier's Department and the NSW Superannuation Office.

Motor Vehicle Costs

The revised running costs of motor vehicles based on categories of sedans and station sedans in Government contract, effective from 1 October 1990, are as follows:

small cars - 10.3 cents per kilometre

medium cars - 12.0 cents per kilometre

large cars - 13.2 cents per kilometre

large executive cars - 15.3 cents per kilometre

The potential exists for further increases in motor vehicle running costs during the next twelve months. The Commercial Services Group have advised that difficulties have been experienced in establishing a contract fuel price. This is due in part to the current oil crisis within the Middle East. It is hoped however that the above-mentioned amounts will hold firm for the full year.

The annual interest charge of 15%, which was identified for review at this time, is to remain unchanged.

For further information on any of these matters, please contact Steve McIntosh, Senior Executive Service Unit, on 228-5491 in the first instance.

R G Humphry
Director-General