C1994-04 Senior Executive Service - Changes to Components of Total Remuneration Packages Resulting from Variations to FBT Legislation

As a result of the Commonwealth Government's legislation on fringe benefits tax, effective from 1 April 1994, FBT applicable to Public Sector Agencies will change from the current rate of 48.4% to an ‘effective' rate of 93.8%.

The introduction of the new FBT arrangement will mean that the cost of most benefit items paid for in pre-tax dollars (with FBT being paid) will be the same as paying for the benefit from after tax income (at the top marginal rate plus the medicare levy). The cost of superannuation and work sponsored child care will not be affected as these are FBT exempt. There may also still be a financial advantage in taking a motor vehicle as part of a total package, even though this benefit will be subject to the full impact of the FBT change.

At least 50% of the package must still be taken as cash salary, defined as:

• salary
• approved leave with pay
• annual leave loading

If an SES officer in your agency feels that he/she is significantly disadvantaged by this requirement I am prepared to consider representations from you, as CEO, on behalf of the officer. Decisions will be made on a case by case basis.

It would be appreciated if you would bring this information to the attention of all SES officers within your administration to ensure that they are able to make any necessary adjustments to their packages from 1 April 1994.

R. G. Humphry,
Director-General.

Issued: SES Unit
Contact Officer: Mr Darrel Cummings
Telephone: (02) 228-5520
Date: 14 February 1994