What is included and excluded from remuneration?
Remuneration is the gross amount you pay to workers before tax and can include both cash and non-cash payments.
There are a number of items that are included and excluded.
Inclusions
Important: Some payments to workers are not part of your payroll, but they must still be included in your calculation of rateable remuneration.
Salaries and wages
- salaries
- wages
- gross pay before tax
- allowances
- annual leave payments (including leave loading)
- long service leave
- paid parental leave (when funded and paid by an employer – Government funded parental leave is not rateable)
- make-up pay
- back pay
- bonuses
- directors' fees (and all remuneration to directors or members of a governing body of a company) fees for work performed by a worker or deemed worker
Contractors
Certain payments to contractors are included. For more information, see the contractors and workers guideline.
Note: Goods and Services Tax (GST) paid or payable in relation to payments to contractors is not considered rateable remuneration.
Fringe benefits
If you are required to complete a Fringe benefits tax (FBT) return for the Australian Taxation Office, then you must include a fringe benefits amount as part of your remuneration.
Go to part 14 of your completed FBT return to calculate your fringe benefits amount by identifying your:
- Type 1 aggregate amount (before gross-up) - if any.
- Type 2 aggregate amount (before gross-up) - if any.
- Type 2 gross up factor.
- Aggregate non-exempt amount - if any.
The formula you use to calculate your fringe benefits amount is:
Type 1 aggregate amount (before gross-up) +
Type 2 aggregate amount (before gross-up) x Type 2 gross-up factor +
Aggregate non-exempt amount.
Superannuation
Many employers pay a higher amount of superannuation than the law requires. It's necessary to include superannuation in the calculation of your remuneration, as this differs between employers.
Superannuation contributions include any contributions made by an employer to:
- a superannuation fund or scheme
- a superannuation guarantee charge
- any other form of superannuation provident or retirement fund
- defined benefit funds as required by actuarial determinations.
Commissions
A commission is a sum of money that is paid to a worker upon completion of a task, usually the task of selling a certain amount of goods or services. It can be paid as a percentage of the sale or as a flat dollar amount based on sales volume. This includes commissions paid to insurance or part-time canvassers or collectors.
Payroll tax
If you're also registered for payroll tax, there are a number of differences between WorkSafe's definition of 'remuneration' and 'wages' used for payroll tax purposes. More information is available from the State Revenue Office.
Workers in other states or territories
If you have workers that work in more than one state or territory the interstate workers guideline can provide you with advice.
Exclusions
These items are exempt when you calculate your rateable remuneration:
- motor vehicle allowance
- accommodation allowance
- apprentices or trainees
- compensation payments to an injured worker
- when a partner makes a cash withdrawal of money received as an allowance
- payments to a portable long service leave scheme and payments to the Redundancy Payments Central Fund
- government funded parental leave payments, passed on to workers by employers acting as agents of the Government
- Goods and Services Tax (GST) paid or payable in relation to payments to contractors is not considered rateable remuneration
- termination payments (for example, payments in lieu of notice, accrued holiday pay, long service leave or severance pay) made to a worker on cessation of employment.
Note: if the person resigns and works their 'notice' period, the payment for this period is not exempt remuneration.
Motor vehicle allowance
A motor vehicle allowance is paid or payable to compensate for any business use of a person's own private vehicle. The exempt amount of the allowance is calculated by multiplying the number of business kilometres by the applicable rate for the period.
- 2021/22 the exempt rate is $0.72 per business km
- 2020/21 the exempt rate is $0.72 per business km
- 2019/20 the exempt rate is $0.68 per business km
- 2018/19 the exempt rate is $0.68 per business km
- 2017/18 the exempt rate is $0.66 per business km
After you've calculated the exemption as a dollar amount, subtract it from the amount of allowance paid to the worker. If the allowance paid to the worker is greater than the exemption amount, the difference between those amounts is considered to be rateable remuneration and should be included in salaries and wages.
Accommodation allowance
If an accommodation allowance extends beyond 30 continuous days, a worker must also be maintaining a personal domestic dwelling for their own use in order for the allowance to retain the exemption for:
- 2021/22 the exempt rate is $285.65 per night
- 2020/21 the exempt rate is $283.45 per night
- 2019/20 the exempt rate is $280.75 per night
- 2018/19 the exempt rate is $278.05 per night
- 2017/18 the exempt rate is $266.70 per night
Any amount paid per night over the exempt rate is considered to be rateable remuneration and should be included in your determination of salaries and wages.
Apprentices or trainees
Some apprentice remuneration is exempt for WorkCover insurance purposes.
Profit distributions and loan accounts
A question may arise as to whether payments and loans made to a proprietor of a business, who is also a worker of that business, are included as remuneration for premium calculation purposes.
For a payment to be included in your premium calculation, the payment must be made to a worker in his/her capacity as a worker, and not in any other capacity (e.g. a shareholder). Therefore, distributions of profit (i.e. amount of surplus after deducting all expenses) to persons who are both owners and workers of the business are not remuneration and not required to be included in premium calculations.
Similarly, trust distributions and company dividends are not included in premium calculations when paid to beneficiaries or shareholders even if they are also workers. These payments must be clearly shown in the books of account as profit distributions and not expenses of the business.
Whether a loan made to a beneficiary or shareholder who is also a worker of the business is included in premium calculations depends on how the loan is regarded under the income tax legislation and fringe benefits tax legislation. If the loan is deemed to be income to the beneficiary or shareholder for income tax purposes, it is not required to be included in premium calculations. On the other hand, if it is regarded as a loan benefit under fringe benefits tax legislation, the taxable value calculated using the formula for Type 2 Benefit is required to be included in premium calculations. Please contact the Australian Taxation Office for more information on income tax and fringe benefits tax.
If the loan repayment is offset against the beneficiary's or shareholder's remuneration, the amount of the remuneration offset will be required to be included in premium calculations. If the loan repayment is offset against trust distributions to the beneficiary or dividends to the shareholder, the amount offset is not required to be included in premium calculations.
A partnership is not a legal entity. Therefore, any payment to the partners (whether the payments are described as 'wages' or 'loans') are regarded as payments or drawings in respect of partnership profits and are not required to be included for premium calculation purposes.
JobKeeper payments
About the JobKeeper payments and WorkCover premium
On 5 May 2020, the Victorian Government confirmed that any eligible Commonwealth Government JobKeeper Payments to meet the $1,500 threshold will not affect the calculation of WorkCover premium.
The availability of JobKeeper payments overlaps with WorkSafe premium calculations for both the 2019/20 and 2020/21 premium years.
Normal wages paid to employees for work performed and leave entitlements are not affected by this determination. This aligns with the treatment of JobKeeper payments for payroll tax purposes.
Rateable Remuneration for WorkCover premium
The following table shows when JobKeeper payments are rateable remuneration. JobKeeper payment amounts changed from the initial $1500 per fortnight to $1200 per fortnight between 28 September 2020 to 3 January 2021 and $1000 per fortnight from 4 January 2021 to 28 March 2021.
*Please note that the example below illustrates the applicable JobKeeper payment amount for the period between 5 May 2020 and 28 September 2020. Use the relevant JobKeeper payment amounts when certifying your rate of remuneration if your employees received Commonwealth Government JobKeeper Payments.
JobKeeper related information
Shares and options
Rateable remuneration does not include the grant of a share or an option to a worker by an employer if:
- the share or option is an Employee Share Scheme (ESS) interest within the meaning of section 83A-10 of the Income Tax Assessment Act 1997
- the ESS interest is granted to the worker under an ESS within the meaning of that section.
Further assistance
Further information and Frequently Asked Questions are available on WorkSafe's website. Alternatively, please contact your WorkSafe Agent or the WorkSafe Advisory Service on 1800 136 089.