There are a range of salary packaging options for new and existing employees who are required to relocate for work. Employers can structure remuneration packages that are attractive to existing employees, potential employees and temporary 457 Visa holders that meet certain Fringe Benefits Tax (FBT) exemptions.
457 Visa holders and their families are in a particularly good position to benefit. A well-structured arrangement can help the employer attract employees with the necessary skills and expertise available in the worldwide labour force without FBT consequences and a 457 Visa holder can increase after-tax home pay by salary packaging the relocation costs attributable to them and their families.
To access the FBT exemptions, employees must be required to relocate in order to perform employment duties. This will mean existing employees must meet specific criteria to ensure the relocation is not temporary. This is where Prosperity can help employers navigate through the complex FBT rules and design a mutually beneficial employment package.
In the below, we have listed a range of salary packaging options that can be provided to relocate employees and potential employees:
The common services a relocation consultant can provide to assist an employee (or his or her family member) relocate.
Removal and storage of household effects
Removal or storage costs incurred as a consequence of an employee temporarily or permanently relocating his/her residence to perform employment duties.
Sale and/or acquisition of permanent residence
Covers “Incidental costs” of the sale or purchase of a home incurred because an employee is required to change his or her usual place of residence to perform employment duties.
Connection/reconnection of utilities following relocation
Covers the cost of connecting telephone, gas or electricity services as a consequence of an employee temporarily or permanently relocating his/her residence to perform employment duties.
Leasing of household goods
Covers the cost of leasing household goods while occupying living-away-from-home (LAFH) accommodation, which requires an alternate home to be maintained in Australia.
Relocation transport and accommodation
Covers transport, accommodation or meals provided to an employee and family members as a consequence of an employee being required to relocate his/her usual place of residence.
Children’s education costs
Covers costs related to the full-time education of the child of an overseas employee.
Covers transport, accommodation or meals en route provided to an overseas employee and family members in connection with having a holiday of not less than three days.
Covers transport, accommodation or meals en route provided to an overseas employee and family members in connection with direct travel between the country of employment and the home country.
Covers the cost of the temporary accommodation (including household goods) to an employee who changes their usual place of residence during employment, or to start employment. This is relief for the period when the employee is looking to find long-term accommodation.
Example: Salary Sacrificing Stamp Duty, Agent Fees and Other Costs
Sally is an employee at ABC Pty Ltd (“ABC”) and owns her property jointly with her husband in Sydney, NSW. ABC have approached Sally to see if she would be interested in a transfer to open a new office in Brisbane. Sally is willing to accept the offer but notes she will need to sell her home in Sydney and purchase in Brisbane.
Provided that Sally sells the Sydney home within two years of employment commencing and purchases a property in Brisbane within four years of commencement, Sally can salary sacrifice the agent fees and other incidentals on the sale of the Sydney home and salary package the stamp duty and incidentals on the Brisbane home. This will be without any FBT consequences to the company. If the relocation costs total $55,000 (including GST), Sally’s salary package could be:
*using 2018 marginal tax rates
At Prosperity, we can assist employers when
- relocating an overseas worker to Australia
- relocating a local worker changing cities for a role
- relocating an existing worker to a different city with a revised employment package
Our goal is to ensure the best remuneration package is offered to the employee, whilst managing the FBT consequences to the company. If the FBT exemptions are not met, the company could end up paying FBT at the top marginal rate of tax (currently 47%).