Activity 3

Todd Williams works for Little Pear Administration Pty Ltd as a sales executive. He was recently promoted from sales trainee and he is considering salary packaging meal expenses in the next FBT period 2021/22.

Current employment contract (without packaging) extract:

Full-time

Gross Salary before superannuation $80,000

After-tax pay $61,933 (after allowing for $1,080 tax offset).

Salary Package information:

Meal expenses benefit - $5,500 (including GST)

3a. Calculate the costs incurred by the employer in relation to providing the meal expenses for Todd (show your workings).

Meal expenses (incl. GST)	5,500
FBT	5,500* 2.0802 =11,441.1*47% = 5,377.32
Input tax credit	5,500/11 = 500
Total cost to the employer	5,500 - 500 + 5,377.32 = 10,377.32

3b. As the Payroll Manager, it is your responsibility to assess if Todd Williams' proposed salary packaging arrangement is compliant with the policies and procedures of the Little Pear Group.

To do so, complete the table below to compare the two scenarios, which include:

• gross salary of $80,000 plus superannuation without the salary sacrifice arrangement, and
• gross salary with the salary sacrifice arrangement, including the meal expense benefit.

Your calculation should be for the year ended 30 June 2021 and include any Low and Middle Income Tax Offset (LMITO), where applicable.

	No Salary Sacrifice	Salary Sacrifice
1 Package Value	80,000	80,000
2 Value of Benefits Provided	-
3 FBT Payable by Employer	-
4 = Salary Sacrifice Amount (2+3)	-
5 Package Value less Salary Sacrifice Amount = Assessable Income (=-4)
6 less Income Tax Payable
7 less Medicare Payable
8 add Tax Offsets (LMITO)	1,080	1,080
9 = After tax pay (=5-6-7-8)
Meal expense benefit	0
Total benefit to Todd