Salary packaging and Taxation Essay Example | Topics and Well Written Essays - 5250 words

Salary packaging and Taxation - Essay ExampleFringe benefits measure allow for apply to both Chris and his employer for this agreement during the FBT year that begins in 1st April 2011 up to 31st display 2012. Superannuation is money put in for a persons retirement. Strict government policy prevent ill-timed access to conserved benefits except in extremely limited and constrained circumstances, as well as severe financial adversity or on a compassionate basis, such as for medical exam cure not obtainable through Medicare. Usually, superannuation benefits are in 3 categories conserved benefits limit non-conserved benefits and unhindered non-preserved benefits. Mainly superannuation is concessionary taxed at a level charge of 15% at devil key points on contributions, and on compensation. Capital Gain Tax inside the fund though is taxed at a charge of 10% if the properties held for longer than twelve months. Contributions whether in the type of employer superannuation, or assoc iate salary sacrifice are levied at this rate. In the volume of the industry funds, the salary tax is paid foregoing to profits are disbursed to associates so it appears as a lesser level of interest on the players statement. From the time when it was introduced, employers have been obligated to make compulsory contributions to superannuation in place of the majority of their workers. ... Superannuation contributions made by Chris are not treated as fringe benefits but as employer contributions. The initial contribution that Chris was making was $17,000. He however, decided to increase it by $15,000. This contribution has to meet three conditions, which are it must be an arrangement before service there should be an agreement amongst West Gate Pty Ltd and Chris and Chris should not have an access to the sacrificed salary (Marsden, 2010). According to the Australian tax voice ruling, the superannuation contributions are taxed in the superannuation funds such as 15% (Australian N ational canvas Office, 1999). West Gate Pty Ltd willing therefore, pay the following amount in tax for contribution 15/100 x $32,000 = $ 4,800 Chris has salary packaged other specifics apart from the superannuation contributions. The first item is a laptop that one of his children requires for school. It is worth $3,300. This is a fringe benefit for Chris. According to the Australian tax piece ruling S23, the tax is levied at 46.5% for the FBT year ending 31st March. West Gate Pty limited will pay the following amount for the benefit 46.5% x $3,300 = $1,534.50 Under this, the income test will take into mark the fringe benefit received. This fringe benefit is not included in the employees assessable income. The employer will be giving a benefit directly to a relative of the employee. Anything is accomplished by the employer in whatsoever agreement, arrangement or transaction so as to award any benefit upon any individual other than the member of staff, whether directly or obliq uely. The benefit would have been taxed if it had been contracted to the employee. The next item that Chris has packaged is a new car. A taxable benefit is be