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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

  • Contract payments for labour only services
  • Payment to contractors who are, or who supply, workers.

Note: Goods and Services Tax (GST) paid or payable in relation to payments to contractors is not considered rateable remuneration.

Fringe benefits

WorkSafe uses the Australian Tax Office (ATO) definition of items that are taxable fringe benefits and the ATO fringe benefits tax year – 1 April to 31 March. You only need to declare the taxable value of fringe benefits that applies to Victorian workers.

Calculating your fringe benefits

Most employers' rateable fringe benefits will be determined by adding together the taxable value of Victorian Type 1 and Type 2 fringe benefits then applying a gross up factor – currently 1.9608.

The gross up factor increased each year until 2014/15 and now aligns with the ATO's lower gross up rate.

Year Gross up rate
2010/11 1.17384
2011/12 1.34768
2012/13 1.52152
2013/14 1.69536
2014/15 1.8868*
2015/16 1.9608
2016/17 1.9608
2017/18 1.8868

* This is a change to the previously notified gross up rate. This rate reflects the Type 2 lower gross up rate for the FBT year ending 31 March 2015 as published by the ATO.

Fringe benefits exemptions

If you have a fringe benefits tax exemption, only the taxable fringe benefits you declare to the ATO are considered rateable for WorkSafe premium purposes. This is the 'aggregate non-exempt amount'.

  • public and not-for-profit hospitals
  • public ambulance services
  • public benevolent institutions
  • health promotion charities.

If you don't have fringe benefits to report to the ATO you'll have no fringe benefits to declare as rateable remuneration to WorkSafe.

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
  • Dividends paid to a shareholder
  • When a partner makes a cash withdrawal of money received as an allowance
  • Payments to the Construction Industry Long Service Leave Board and contributions 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 a worker for the use of their own vehicle for work purposes:

  • for 2013/14, 2014/15 and 2015/16 the exempt amount is the number of business kilometres travelled multiplied by 77 cents
  • for 2016/7 and 2017/18 the exempt amount is the number of business kilometres travelled multiplied by 66 cents.

After you've calculated this as a dollar amount, subtract it from the amount of allowance paid to the worker. If there is a remainder it's 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 2010/11 the exempt rate is $227.35 per night
  • for 2011/12 the exempt rate is $238.10 per night
  • for 2012/13 the exempt rate is $248.25 per night
  • for 2013/14 the exempt rate is $250.85 per night
  • for 2014/15 and 2015/16 the exempt rate is $253.25 per night
  • for 2016/17 the exempt rate is $257.95 per night
  • for 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. Learn more about apprentices and trainees.