Financial Services

Salaries

The payment of net salaries and wages is not subject to GST.

Salary deductions

The University calculates gross salaries and makes deductions to arrive at a net salary payable. The deductions are either retained by the University (when the University is the service provider) or remitted to external service providers on behalf of the employee.

Transactions out of the scope of GST include:

  • deduction of PAYG withholding tax from gross salaries
  • deductions from net salary on behalf of external entities such as union fees, superannuation contributions, health fund contributions and gym fees. The University is merely acting as an agent by deducting fees and remitting them to service providers.

GST taxable transactions include:

  • deductions for taxable supplies provided by the University, such as parking fees
  • deduction of salary packaging fees
  • commissions earned
  • employee contributions.

GST-free transactions include:

  • the deduction of amounts for GST-free supplies provided by the University.

Salary packaging

The University provides a salary packaging service to its employees. Fees are charged for this service by payroll deduction. This service is subject to GST.

On-charging salaries

The University may pay salaries to individuals who are contracted to other entities, such as hospitals, which are not included in the University GST group. Either the entire salary, or a portion thereof, is charged out to that entity/organisation at cost. An example of this would be under a secondment arrangement.

The payment of the salary by the University to the employee is not subject to GST.

The on-charge of the salary to the organisation is subject to GST and therefore 10 per cent is levied on top of the cost.

A tax invoice must be supplied by the University to enable the organisation to claim back the GST as an input tax credit.

Example: The University pays an employee a gross salary of $100. The salaries account is costed with $100. The University then charges the hospital the GST-inclusive amount of $110. The salaries recoveries account is credited with $100 for a net gain of nil. The GST account is credited with $10, which is then paid to the ATO.

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