THE FEDERAL Budget’s proposal, if introduced as announced by the Government, will create several remuneration opportunities for employers, according to professional services firm KPMG.
THE FEDERAL Budget’s proposal, if introduced as announced by the Government, will create several remuneration opportunities for employers, according to professional services firm KPMG.
HR directors and managers will need to spend a couple of weeks considering the impact of the Budget on employees – especially inducements for expatriates, salary packaging arrangements and superannuation contributions and potential terminations, said Martin Morrow, KPMG’s tax partner.
One major opportunity to come out of the Budget for business is the potentially large savings from the new foreign income exemptions for expatriates.
“This new legislation will make it easier and cheaper for Australian companies to employ skilled workers and professionals from around the world,”he said.
“It will also be a factor in enticing multinationals to establish regional operations in Australia or transfer employees to the country.”
While this legislation might not take effect until 1 July next year, Morrow said employers need to start considering the impact on their budgets and resource planning now.
The Budget also contained significantcuts in personal income tax to be phased in over the next two years, he said. “The impact of these changes will give employees the opportunity to reconsider their salary packaging arrangements particularly if they are earning between $63,000 and $95,000 a year.”
As a result, he said employees will need to consider all the packaging choices available to them before they enter into a novated lease that will run for the next three to four years.
“In light of this more employees are likely to start using the ‘employee contribution method’ to get the maximum advantage out of packaging cars,” Morrow said.
Employers also need to be alert to the impact of the abolition of the superannuation surcharge and the termination payments surcharge, he said.
“Employees who are currently sacrificing for additional superannuation contributions may want to defer them until after 1 July 2005. This will save 12.5 per cent surcharge on the contributions,” Morrow said.
“Currently employees who are made redundant are subject to a termination payment surcharge of 12.5 percent. However, this surcharge should be removed after 1 July 2005.”
