The main purpose of this Circular is to advise agencies that:

• the restriction limiting salary packaging to 50% of an employees' superable or award salary has been removed for graded officers and SES officers. The amount of salary which can be packaged or salary sacrificed is now unrestricted. However, employees will need to pay post-tax commitments and payroll deductions such as employee superannuation contributions, union fees, health fund premiums, maintenance orders etc before determining the availability of salary for packaging purposes.

To facilitate this change, awards will need to be varied. The Public Employment Office will co-ordinate this and will contact you in relation to any individual awards which will need to be varied. Until the award variations are completed, the changes will be effective by way of administrative action from 1 April 2006 for all agencies currently offering salary packaging.

Agencies should also note the following salary packaging issues which have been reviewed or considered recently:

• the contract for salary packaging administration services with McMillan Shakespeare Australia Ltd (MSA) has been extended for 12 months and now expires on 31 December 2006. This is to enable a tender process to be undertaken to test the market for other potential providers. It is intended that agencies be able to choose from a panel of providers. 
   
• the Auditor-General reviewed agencies' compliance with salary packaging for non-SES officers in late 2005. Compliance with most aspects of the Premier's Department policy issued in Circular 2002-61 was generally high. However, it is timely to remind all agencies that :
  • employees cannot package more than 1 car;
  • agencies with employees covered by the Crown Employees (Public Sector - Salaries 2004) Award or the Crown Employees Wages Staff (Rates of Pay) Award 2005 must use State Procurement contract 6036, currently awarded to MSA, if they decide to outsource salary packaging administration services in respect of those employees.
     
• MSA has recently advised that:
  • in 2004 it established a free Fringe Benefits Tax (FBT) reconciliation service for employers. Where employers provide data on the amount of FBT collected, the contractor will reconcile this with the actual FBT liability;
  • it is in the process of updating all employee guides to provide more detailed information regarding the options for novated leasing and the organisations that are approved to provide novated leasing finance.
     
• Under the current salary packaging policy, Departments/agencies have the option of providing some or all of the salary packaging and administrative services in-house. The existing policy also requires salary packaging to be implemented on a cost neutral basis to the employer. It is envisaged that most agencies implementing salary sacrifice to superannuation in-house would be able to do so on a fee free basis for employees. 
   
• Under the current policy casuals are ineligible to salary package. Casuals will be now eligible to salary sacrifice to superannuation subject to Departmental/agency convenience. The operative date will be a matter for agencies to determine in the context of any payroll or other administrative changes they may need to introduce to implement this change. 
   

Further information about novated leasing arrangements is available by telephoning MSA on 1300 656 266 or email[email protected]. General enquiries regarding salary packaging administration services provided by MSA is available by telephoning MSA on 1300 735 363.

C Gellatly
Director-General

Issued : Employee Relations & Workforce Planning Services (Public Employment Office)
File no: PSM/00361.11
Date: 15/3/2006
This circular supersedes Circular no. C2002-61 in relation to salary/wages limits, and Circular C2003-26