working together with

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working together with
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Performance Reviews Getting on Top!
Remuneration and Salary Packaging in Australia
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What we do
Acquire
Manage
Optimise

• Search
• Executive Recruiting
• Contracting
• Talent Acquisition Management
• Recruitment Projects
• Employer Branding

• Payroll and personnel systems and services
• HR systems and services
• Time and attendance
• Workforce management
• Employee self-service

• HR Audits
• Assessment
• Organisational Change
• Performance Management
• Leadership

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How we do it
Acquire
Manage
Optimise

• Focused brands
• Expertise
• Accountability
• End to end solutions

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Basic Understanding

• Understand the objective
• Pay versus performance
• Preparation
• Understand the audience and their intentions

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Preparation

• Preparation
• (before the review conversation)
• Collaboration
• (during the review conversation)
• Confirmation
• (after the review conversation)

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Three Steps the employees role

• 1) Physical Preparation
• Documents and information
• Position description
• Goal achievement and previous reviews
• 2) Mental Preparation
• What do you want to get out of the review?
• What have your successes been since the last
  review?
• What obstacles have you encountered in your work
  since your last conversation?
• Is there training you need to do your work more
  effectively? (existing role and progression)
• 3) Logistical Preparation
• Who is responsible for the room, time etc.?
• Allocate adequate time.

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Collaboration

• Review any agreed next steps or commitments
  from previous conversations.
• Review successes since last conversation.
• Review any obstacles from the last conversation.
• Be prepared to provide and receive constructive
  feedback.
• Let your manager know what you would like to
  bring to his/her attention.

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Confirmation

• Confirm all agreements and goals in writing
• Make sure the next steps are clear what, who
  and by when.
• Check to see if needed resources are available
  and find alternatives
• Set the next check in date

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Above all.

• Help ensure a productive and positive performance
  review by
• Knowing your role and responsibilities
• Being prepared for the conversation
• Bringing your ideas for developmental goals
• Keeping your manager appraised throughout the
  year of your progress
• Being an active player in a collaborative
  process.
• ..And know your worth!!!

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Typical questions

• What work did you enjoy the most and why?
• What skills and talents helped you achieve your
  success?
• What was the most difficult or challenging work
  youve done?
• What results make you the most proud?
• What existing or new skills would you like to
  develop?
• Are there any projects or assignments youd like
  to undertake or be involved with?

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Alternative performance reviews

• Peer reviews
• Self-reviews
• Upward assessments
• 360 degree feedback

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SALARY PACKAGING by
Peter Oreb National Manager Consultants Exchange
Global (CXC)
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Agenda

• What is salary packaging?
• How does it work?
• How can you benefit?
• Who is eligible?
• What are the conditions?

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WHAT IS SALARY PACKAGING?

• Means of restructuring your income.
• Provides opportunity to receive at least part of
  their remuneration in a form other than take home
  pay
• Deductions and fringe benefits incorporated in
  remuneration, hence saving in PAYG tax.
• These fringe benefits cannot be claimed at year
  end with your accountant if you are PAYG.

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ITEMS THAT CAN BE PACKAGED?

• Laptops/Mobiles and PDAs
• Briefcases
• Airline lounge membership
• Superannuation
• Education expenses
• Utility payments
• Private travel
• Novated leasing of a motor vehicle
• Membership fees
• Work clothing and tools of trade
• Computer Equip
• Internet Charges
• Cost Incurred to conduct interviews
• Flights home and holiday flights

• Investment loans
• Negative gearing
• Taxi travel
• Travel Allowance
• Living away from home allowance
• Relocation
• Costs associated with buying selling a house
  stamp duty, agent commissions
• Children's education

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3000 Laptop example, on MTR of 41.5 (75k
paltlt150k pa)
PAYG Purchase -3000 Yr 1 Depn (claim 1500
, tax back 1500 x 41.5 )
623 Yr 2 Depn (claim 1500 , tax back
1500 x 41.5 ) 623 Total
Outlay 1,754
Salary Packaging Purchase -3000 FB
reimbursement - pre tax benefit of 3000 (claim
3000 x 41.5) 1245 Yr 1 Depn
(claim 1500 , tax back 1500 x 41.5 )
623 Yr 2 Depn (claim 1500 , tax back 1500 x
41.5 ) 623 Total Outlay
509
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Salary Packaging - Case Study

• Australian based IT contractor.
• Working for 60 per hour or approx 120,000 per
  year.
• Will be leasing a car worth 30,000 and buying
  a 3,000 laptop.
• Uses car on the weekend and in the evening -
  that is not for business purposes and will drive
  15,000 kms per year.

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Salary Packaging - Case Study
EXTRA 3,850 CASH in HAND
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Permanent employee?

• Basic company payroll is PAYG
• Companies CAN provide salary packaging
• Its worth asking what is available
• It is NOT a legal requirement, they do not have
  to provide
• If they do not what options to you have?

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Common Tax Structures

• PAYG
• Company PTY
• Managed Structure
• Sole trader
• Trust

• General Factors to consider
• Start up costs
• APSI Tax legislation (80/20 rule)
• Salary Packaging options
• Personal responsibility for debts
• Ongoing costs compliance costs
• Risk of non-compliance
• Administration required
• Tax Advantages benefits
• Disadvantages

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WHO ARE CXC ?

• Salary packaging, Payroll administration
  experts
• Over 15 years experience
• 19 offices in 12 countries
• Payrolling 5000 contractors globally
• Australian owned and operated

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Example Local Contractor
60 / hr
Agency/client
CXC
120,000 p.a 15,000 FB Expense (Motor
Vehicle) 4,000 FBT (Motor Vehicle)
7,000 Business Expenses 3,000 FBT Exempt eg.
Laptop 78,540 Taxable Salary 25,800
Tax Fees 83,150 Cash
in hand MVA 7,100 Superannuation
90,250 Total Benefit
PAYG Contractor 120,000 Salary Super 33
550 Tax 76 550 Cash in Hand 9,900
Superannuation 86,450 Total Benefit
Contractor
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Example Interstate or O/Seas Contractor
60 / hr
Agency/client
CXC
PAYG Contractor 120,000 Salary Super 33
550 Tax 76 550 Cash in Hand 9,900
Superannuation 86,450 Total Benefit
120,000 p.a 3,000 Business Expenses
3,000 FBT Exempt (Laptop) 28,600 LAFHA
73.400 Taxable Salary 23,900 Tax
Fees 89,600 Cash in hand 6,600 Superannuatio
n 96,200 Total Benefit
Contractor
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Summary

• Main structures PAYG , Company , Managed
  structure
• Does the APSI affect you?
• Salary packaging works INCREASES CASH IN
  HAND!!!
• Get a number of opinions, not from just one
  accountant.
• CXC, payroll alternative, salary packaging, no
  admin and access to other financial services.
  Free assessment.
• Analyse costs vs benefits and your time involved.

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THANK YOU
ANY QUESTIONS?
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PAYG

• Benefits
• No start up, exit or ongoing costs
• No Administration

• Disadvantages
• Generally maximum Tax paid
• Maximum Surcharges

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Company (Pty Ltd)

• Benefits
• Potential to access company tax rate of 30
• Succession planning
• Company may be able to retain profits to expand
  business, which are not taxed.
• Ownership can be transferred
• Limited liability
• Control lies with the directors

• Disadvantages
• Expensive to establish approx 1200
• High compliance and accounting costs
• Separate tax returns for company individual
• Limited deductions if not pass APSI
• Difficult to obtain costly Insurance Costs
• Admin (your time) 30hrs pa
• Statutory reporting - BAS
• APSI - Tax audit risks
• Director liability

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Managed Structure

• Disadvantages
• No income Splitting
• Tax deductible management fee

• Benefits
• No start up or exit costs
• Access to Expert Salary Packaging
• More disposable cash
• Access to Wholesale Super Fund Tax effective
  Investment options
• No Directors Liability
• Very limited if at all admin, more free time
• All Regulatory Statutory returns done
• Workers Compensation Public
• Liability Professional Indemnity
• Access to financial advice and planning
• Extensive member benefits
• ACS membership training discounts

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Sole trader

• Benefits
• Low cost
• Short establishment time
• Simple minimal record book
  keeping
• Owner retains all authority and control
• Do not have to make contributions to
  superannuation
• Easy to wind up

• Disadvantages
• Most companies/Agencies will not engage with a
  sole trader
• Personally responsible for debts other
  liabilities
• Cant get workers compensation
• Difficult to obtain high Insurance Costs
• Admin (your time) 20hrs pa
• Quarterly BAS
• APSI - Tax audit risks

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Trust

• Benefits
• Ability to Split Income in very limited cases
• Ease of sucession
• Public has no access to the trusts
  accounts/property
• Income distributed to beneficiaries at their tax
  rate.
• Trusts not subject to income tax on their
  profits provided it is fully distributed to
  beneficiaries
• Limited liability in trust as company acting as
  trustee

• Disadvantages
• Most companies/agencies wont engage with trusts
• High start up costs, approx 2000 is typical
• Extensive regulations to comply with
• Tax return for trust , company trustee and
  beneficiaries
• Loses derived cannot be distributed to
  beneficiaries
• Trust cannot retain profits
• Cannot get WC
• High Insurance and Accounting Costs
• Admin (your time) 20hrs pa
• Penalties interest
• APSI - Tax audit risks

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What if you dont pass the APSI tests?

• The personal income you earn will be treated as
  your income and taxed at PAYG tax rates
• Your company or trust must
• Pay the personal services income as salary
  wages , and hence pay PAYG taxes on it.
• Withhold tax on the personal services income
  attributed to you and send it to the ATO.
• You will not be able to claim certain deductions

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PAYG