Rio Tinto Employee Benefits Guide

Employee Benefits Description Library SALARY PACKAGING ELIGIBILITY NOVATED LEASING REMOTE AREA BENEFITS FIFO ADDITIONAL BENEFITS GET STARTED

Introducing salary packaging the Maxxia way

Your employer has chosen Maxxia as your workplace benefits provider to bring you the best possible salary packaging experience.

We’ve specialised in workplace benefits for close to 30 years. In that time, we’ve worked hard to perfect salary packaging so that you can maximise your tax benefits, claim faster and easily view account balances anytime. Maybe that’s why we’re the largest and a trusted supplier of salary packaging throughout Australia.

Salary packaging in short

Fully approved by the Australian Tax Office, salary packaging lets you pay for things like a car as well as work-related expenses with money from your salary before tax. This reduces your taxable income, and boost your disposable income.

The salary packaging difference

Without salary packaging $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

Your pay Tax Expenses Less disposable income

With salary packaging

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Your pay Expenses Tax More disposable income These costs reduce your Reduce your tax! taxable income

1 SALARY PACKAGING ELIGIBILITY NOVATED LEASING REMOTE AREA BENEFITS FIFO ADDITIONAL BENEFITS GET STARTED

Benefit Airport Lounge Membership Financial Counselling Fees of Trade Tools FIFO Flights (self-funded) Housing (employer provided) Remote Area Housing (private rental) Remote Area Benefits (Mortgage Interest) Remote Area Costs) Benefits (Purchase Remote Area Benefits (Gas and Electricity) Remote Area Relocation Expenses (Domestic) Novated Leasing

Argyle Diamond Argyle 4 4 4 4 4 4 4 4 4 4 4 What can you Mine - Kununurra Dampier Salt - 4 4 4 4 4 4 4 4 4 4 4 package and Dampier Dampier Salt - 4 4 4 4 4 4 4 4 4 4 4 Dampier Lake Mcleod eligibility Salt Dampier Salt - 4 4 4 4 4 4 4 4 4 4 4 Port Hedland Dampier Salt Head 4 4 4 – – – – – – 4 4 Office Perth West Angeles 4 4 4 4 – – – – – 4 4 Hope Downs 1 4 4 4 4 – – – – – 4 4 There are a number of Hope Downs 4 4 4 4 4 – – – – – 4 4 expenses that you can Yandicoogina 4 4 4 4 – – – – – 4 4 salary package each Brockman2 4 4 4 x4 – – – – – 4 4 Fringe Benefits Tax (FBT) Brockman 4 4 4 4 4 – – – – – 4 4 year (1 April – 31 March). Nammuldi 4 4 4 4 – – – – – 4 4 Karratha 4 4 4 4 – 4 4 4 – 4 4 Exactly which benefit Dampier 4 4 4 4 – 4 4 4 – 4 4 Rio Tinto you could package will Wickham 4 4 4 4 – 4 4 4 – 4 4 depend on your location/ Iron Ore Cape Lambert 4 4 4 4 – 4 4 4 – 4 4 site. Pannawonnica 4 4 4 4 – 4 4 4 – 4 4 4 4 4 4 4 4 Please refer to the matrix Mesa A – – – – – 4 4 4 4 4 4 to see what you could Mesa J – – – – – 4 4 4 4 4 4 4 4 4 4 salary package based on Tom Price – 4 4 4 4 4 4 4 4 4 4 your location. Paraburdoo – Marrandoo 4 4 4 4 – – – – – 4 4 Boxes marked with a cross Channar 4 4 4 4 – – – – – 4 4 are not offered. Eastern Range 4 4 4 4 – – – – – 4 4 Darwin 4 4 4 4 – – – – – 4 4 ERA Jabiru 4 4 4 4 4 4 4 4 4 4 4 Weipa 4 4 4 – 4 4 4 4 4 4 4 Rio Tinto Gove 4 4 4 – – – – – – 4 4 Aluminium Yarwun 4 4 4 – – – – – – 4 4 Melbourne CBD 4 4 4 – – – – – – 4 4 Brisbane CBD 4 4 4 – – – – – – 4 4 Group 4 4 4 4 4 Services Perth CBD – – – – – – Perth Operations 4 4 4 – – – – – – 4 4 Centre

2 SALARY PACKAGING ELIGIBILITY NOVATED LEASING REMOTE AREA BENEFITS FIFO ADDITIONAL BENEFITS GET STARTED

Novated Leasing

Have you been thinking about getting a new car and wondered how you were going to pay for it? Well, novated leasing from Maxxia could be just what you’re looking for.

Basically, a car is leased in your name, via your employer, and instead of paying with the money you have left over after tax, your lease is covered using funds from a combination of your pre- and post-tax salary.

In addition to the potential tax savings, there’s also the convenience of having all your lease payments as well as all your car’s running costs – including petrol, insurance and servicing – combined into one convenient, regular payment.

A novated lease could benefit almost anyone who needs a car. You don’t even have to get a brand new car – in fact, you can lease your existing vehicle – and you don’t have to be a high-income earner or drive lots of kilometres to benefit.

Eligibility All sites are eligible

3 SALARY PACKAGING ELIGIBILITY NOVATED LEASING REMOTE AREA BENEFITS FIFO ADDITIONAL BENEFITS GET STARTED

Remote Area Benefits

So, you live and work in a This unique benefit allows you to salary remote area. Bet you didn’t package the cost of: know that because of where • interest you pay on your mortgage for you’re based, you could the house you live in potentially save thousands each • rent you pay an estate agent/private year by salary packaging some party for the house you live in living expenses with Maxxia? • rent you pay to your employer for the house you live in (select The Remote Area Benefit allows you to locations only) pay portions of your rent or mortgage • your electricity or gas expenses if you interest repayments using your pre-tax salary package rent or mortgage salary. If you’re eligible to salary package, as a remote area benefit you could pay less income tax and could enjoy more disposable income each year, • purchasing a property in a remote area no matter how much you earn. or the purchase of land to build a home in a remote area

Eligibility Rio Tinto employees on a residential contract, living and working in the following locations.

Remote Area Housing Karratha Paraburdoo Dampier Kununarra (Argyle Diamond) Wickham Port Hedland (Dampier Salt) Cape Lambert Carnarvon (Dampier Salt) Pannawonnica Weipa (Alcan) Tom Price

Further information

If you are considering packaging remote area benefits, you’re required to make an appointment with a Customer Education Manager at your local state office.

4 SALARY PACKAGING ELIGIBILITY NOVATED LEASING REMOTE AREA BENEFITS FIFO ADDITIONAL BENEFITS GET STARTED

FIFO Flights (self-funded)

Turn your daily commute into an annual benefit!

If you work in a remote area, you may be eligible to salary package the cost of self- funded airfares to and from your usual place of residence to your workplace with the Remote Area Assistance Fly-In, Fly-Out benefit.

Eligibility All employees working under a FIFO contract/arrangement are eligible except for employees working at Gove, Yarwun or Weipa where FIFO flights cannot be packaged.

FIFO Airport Parking

Save on your flight, save on your parking.

If you’re a Fly-In-Fly-Out (FIFO) employee, you can also salary package your parking fees at any Australian airport. This means you could use your before-tax money to pay for your parking now, instead of waiting until tax time to claim!

Join the FIFO Parking Program and salary sacrifice yourairport parking now.

Eligibility All employees working under a FIFO contract are eligible.

5 SALARY PACKAGING ELIGIBILITY NOVATED LEASING REMOTE AREA BENEFITS FIFO ADDITIONAL BENEFITS GET STARTED

See what else you can salary package

There are a number of expenses that you can salary package each Fringe Benefits Tax (FBT) year (1 April – 31 March) up to the cap limits.

Airport Lounge Membership Relocation Expenses (Domestic) You could save on airport lounge Need to move home for your job? memberships by salary packaging the You could salary package your relocation expense with Maxxia. So, next time expenses if you move for work purposes. you’re at the airport, head to the lounge This is a benefit that applies regardless of and relax in the knowledge that you’ve whether you buy or rent – and could help saved on the membership fee. save you money on your move.

If you’re buying a new house, you could salary package a range of expenses, including: Financial Counselling Fees • stamp duty If you talk to a registered financial adviser • advertising about your finances or investment matters, you may be eligible to salary • legal fees package the fees. It’s a double-win: • agent commission you’re getting advice on investing in your future, while saving in the now. • borrowing expense • storage and removal costs • utility connection costs (electricity, gas and telephone).

Tools of Trade You could also salary package the cost If you’re in need of specific ‘tools of of temporary rental accommodation for trade’ – that is, tools which are used you and your family, at the old location or primarily for performing your usual work your new destination. duties – then why not salary package the (Note: although this benefit is Fringe cost and save? Benefits Tax - exempt, some rules apply. ‘Tools of trade’ may include: It’s best to check with your employer or contact us for more information.) • manually operated tools • electrically powered hand tools

• toolboxes Eligibility • laptops and phones All sites are eligible. • tool belts. (Note: major equipment, such as a lathe or drill press, does not qualify under this benefit.)

6 SALARY PACKAGING ELIGIBILITY NOVATED LEASING REMOTE AREA BENEFITS FIFO ADDITIONAL BENEFITS GET STARTED

Getting started

If you wish to enquire about salary packaging or novated leasing

Call Maxxia on 1300 123 123 or contact your local state office to arrange a consultation with a Customer Education Manager.

Maxxia’s Customer Education Managers travel the width and breadth of all states in Australia on To book a consultation contact a regular basis and are available for consultations your local area office when in your area. Alternatively, if access is WA State Office (WA/NT/SA) difficult, our Customer Education Managers can arrange a person-to-person Webinex consultation [email protected] where there is an available internet connection. 08 9363 7000

If you are required to consult on your available NSW Office (QLD/NSW/VIC) benefits please make an appointment with a [email protected] Customer Education Manager by contacting your local state office. 1300 123 123

Start doing more with your money

1300 123 123 (8am–7pm, Mon –Fri AEST) maxxia.com.au

Important information: This general information doesn’t take your personal circumstances into account. Please consider whether this information is right for you before making a decision and seek professional independent tax or financial advice. Conditions and fees apply, along with credit assessment criteria for lease and loan products. The availability of benefits is subject to your employer’s approval. Maxxia may receive commissions in connection with its services.

Maxxia Pty Ltd | ABN 39 082 449 036. Employee Information Guide

Salary Packaging – for Rio Tinto employees

Contents

Contents ...... 2 1. Introduction ...... 4 2. Salary Packaging Options ...... 5 2.1 What can you salary package?...... 5 2.2 FBT Free Benefits ...... 7 2.3 Concessionally Taxed Benefit Items ...... 8 3. Taxation ...... 10 3.1 Fringe Benefits Tax Exempt Items ...... 10 3.2 Novated Motor Vehicle Leasing – FBT Method ...... 10 3.3 Novated Motor Vehicle Leasing – Employee Contribution Method (ECM) ...... 11 3.4 Future Taxation ...... 12 3.5 Payment Summary Reporting...... 12 4. Administration ...... 13 4.1 Administration of Benefit Funds ...... 13 4.2 Terms and Conditions ...... 13 4.3 Methods of Payment ...... 14 4.4 Reconciliation ...... 14 4.5 Changed Circumstances ...... 14 4.6 Leave ...... 14 4.7 Ceasing Packaging ...... 15 4.8 Reports ...... 15 5. Administration Cost ...... 16 6. Where To From Here? ...... 17 7. Further Information ...... 18 7.1 Access to Website ...... 18 7.2 Privacy Policy...... 18 7.3 Access to Your Personal Information ...... 18 Appendix 1: ASSOCIATE MOTOR VEHICLE LEASE ...... 20 Appendix 2: NOVATED MOTOR VEHICLE LEASE ...... 22 Appendix 3: REMOTE AREA HOUSING (EMPLOYER PROVIDED) ...... 24 Appendix 4: REMOTE AREA RENTAL ASSISTANCE ...... 26 Appendix 5: REMOTE AREA REIMBURSEMENT OF INTEREST ...... 28 Appendix 6: ...... 30 REMOTE AREA REIMBURSEMENT ON PURCHASING OR BUILDING A PROPERTY ...... 30 Appendix 7: REMOTE AREA – PROVISION OF GAS AND ELECTRICITY ...... 32 Appendix 8: REMOTE AREA – HOLIDAY TRAVEL ASSISTANCE ...... 34 Appendix 9: IN HOUSE CHILDCARE EXPENSES ...... 40 Appendix 10: IN HOUSE GYM ...... 41 Appendix 11: AIRPORT LOUNGE MEMBERSHIP ...... 42 Appendix 12: FINANCIAL COUNSELLING FEES ...... 43 Appendix 13: ELIGIBLE WORK RELATED ITEM – TOOLS OF TRADE ...... 44 Appendix 14: SELF FUNDED FLIGHTS - FLY IN FLY OUT (FIFO) ARRANGEMENTS ...... 45 Appendix 15: FLY-IN FLY-OUT (FIFO) CAR PARKING ...... 46 Appendix 16: RELOCATION EXPENSES (DOMESTIC)…………………………………………………………..47

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Disclaimer This Employee Information Guide (the ‘Guide’) has been prepared without consideration of the particular investment objectives, financial situation and needs of individual employees. In all cases, employees should conduct their own investigation and analysis of the information contained in this Guide. No employee should act on the basis of any matter contained in this Guide without taking appropriate legal, financial and other professional advice regarding their own particular circumstances. Each employee who wishes to take advantage of salary packaging is advised to seek independent financial advice particularly in relation to complex motor vehicle fringe benefits tax and income tax issues. Rio Tinto, Maxxia Pty Ltd (‘Maxxia’), each of their related bodies corporate, each of their employees, and every person involved in the preparation of this Guide, expressly disclaim all liability for any loss or damage of whatsoever kind (whether foreseeable or not) which may arise from any person acting or relying on any statements contained in this Guide, or for any advice given by any salary consultant, and notwithstanding any negligence, default or lack of due diligence and care. The actions of your employer and Maxxia in relation to paying employment benefits from salary packages to a third party does not in any way imply a transfer of responsibility or liability to the employer or Maxxia in relation to any agreement, or understanding between the employee and that third party. Maxxia provides administration and referral services on behalf of employers as an Authorised Representative (No. 278683) of McMillan Shakespeare Ltd (AFSL No. 299054). It does not provide any form of financial, taxation or financial product advice to employees on the relative merits of packaging programs or on any other basis. Some information on taxation matters may be provided to illustrate possible advantages, but such information is of a general nature only. You should seek your own independent professional advice on how packaging programs may impact your particular financial, taxation and welfare benefit circumstances. Maxxia may receive commissions or rebates in connection with some services it provides or arranges to be provided by third parties. By appointing and utilising Maxxia’s services, you consent to its receipt of such commissions and rebates. Tax laws regarding the treatment of salary benefits may change, which could adversely impact your financial, taxation or welfare benefit decisions. This disclaimer does not limit or alter those statutory rights that cannot be excluded.

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1. Introduction

The purpose of this Guide is to provide an outline of the salary packaging arrangements that employees who are eligible to participate may wish to take advantage of. Salary packaging, also commonly referred to as salary sacrificing or total remuneration packaging, is an arrangement between an employee and their employer, whereby the employee agrees to forgo part of their future entitlement to salary or wages in return for the employer providing the employee with benefits of a similar value. Salary packaging provides a range of potential advantages to employees including:

• the ability to allocate before tax dollars, not after tax dollars, towards eligible benefits, and • allocating salary and optional benefits to suit individual financial and personal situations. The Income Tax Assessment Act 1936, the Income Tax Assessment Act 1997 and the Fringe Benefits Tax Assessment Act 1986 together with your employer’s policy regulate and define the type of benefits that can be included in a salary package, how the benefits are treated for taxation purposes and the administrative arrangements that apply. This legislation or policy may change from time to time. If changes do occur employees may be given the opportunity to adjust the structure of their salary package to take account of any new requirements. Fringe Benefits Tax (‘FBT’) was introduced in 1986 to tax the value of fringe benefits provided by an employer to an employee or associate (related third party) in place of, or in addition to, the employee’s salary or wages. FBT is payable by the employer on fringe benefits provided to employees.

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2. Salary Packaging Options

In keeping with modern salary practices, employees will have the discretion to determine the mix of salary and benefits (within the approved list) that will constitute their salary package. Participation in salary packaging is voluntary.

2.1 What can you salary package? The elements of the salary package are:

• Salary; • Taxation; • Optional benefits; and • Administration fee(s).

All employees are eligible to salary package the following benefits:

• Novated Lease (Car) • Financial Counselling Fees • Airport Lounge Memberships • Tools of Trade • Relocation Expenses (Domestic)

The following table on page 6 outlines additional benefits available by site. At your discretion you may nominate an annual amount for each of these benefits, Fringe Benefits Tax and the Administration fee.

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All city based business Melbourne CBD Self funded FIFO flights (contracted FIFO only) unit employees Brisbane CBD Airport car parking for FIFO (contracted FIFO only) including corporate Perth CBD functions

Aluminium Weipa Remote area reimbursement of interest Remote area housing (employer provided) Gove In house childcare (Weipa only) Remote area rental assistance Yarwun In house gymnasium fees (Weipa only) Remote area provision of gas and electricity Remote area reimbursement of purchasing a (Gove only) property

ERA Darwin Airport car parking for FIFO* Remote area housing (Jabiru only- employer provided) Jabiru Remote area reimbursement of interest Remote area provision of gas and electricity (Jabiru only) (Jabiru only) Self-funded FIFO flights* Remote area reimbursement of purchasing a property

Iron Ore Pilbara sites Remote area housing (employer provided) Remote area reimbursement of purchasing a property Remote area rental assistance (private rent) Self-funded FIFO flights* Remote area reimbursement of interest Airport car parking for FIFO*

Argyle Site/Kununurra Remote area housing Remote area reimbursement of purchasing a property Remote area provision of gas and electricity Remote area holiday travel assistance Remote area rental assistance (private rent) Self-funded FIFO flights* Remote area reimbursement of interest Airport car parking for FIFO*

Dampier Salt Non-Perth sites (Carnarvon, Remote area housing Remote area reimbursement of purchasing a property Dampier, Port Hedland) Remote area provision of gas and electricity Self-funded FIFO flights* Remote area rental assistance (private rent) Airport car parking for FIFO* Remote area reimbursement of interest

* If employee is contracted to work FIFO

A detailed description of each of the benefits is provided in the Appendices to this Guide

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2.2 FBT Free Benefits AIRPORT LOUNGE MEMBERSHIP An employee may salary package the cost of airport lounge membership. Further information in relation to this benefit is provided in Appendix 11 or in the Rio Tinto Quick Reference Card – Salary Packaging Airline Lounge Memberships FINANCIAL COUNSELLING An employee may salary package payments made for the provision of salary packaging advice from a financial advisor or accountant. Further information in relation to this benefit is provided in Appendix 12 or in the Rio Tinto Quick Reference Card – Salary Packaging Airline Lounge Memberships IN HOUSE CHILDCARE An employee may salary package payments made in respect of childcare fees to Rio Tinto Aluminium for the provision of childcare at Cape Kids Childcare Centre. Further information on this benefit is provided in Appendix 9. This benefit is ONLY available to employees working at Weipa. IN HOUSE GYMNASIUM An employee may salary package payments made in respect of Gymnasium fees to Rio Tinto Aluminium at the onsite facility at the Weipa Fitness Centre. Further information on this benefit is provided in Appendix 10. This benefit is ONLY available to employees working at Weipa. TOOL OF TRADE An employee may salary package the cost of tools of trade. Tools of trade are those used by the employee in the normal course of their employment and are eligible for an income tax deduction. Further information on this benefit is provided in Appendix 13 or in the Rio Tinto Quick Reference Card – Salary Packaging Tools of Trade REMOTE AREA HOUSING (EMPLOYER PROVIDED) An employee may salary package rental payments to the employer for accommodation in nominated remote area locations provided that the employee resides in accommodation leased or owned by the Employer. The payments made in relation to this benefit are not subject to Fringe Benefits Tax (FBT). Before undertaking remote area benefits, all Rio Tinto employees require an appointment with a local Customer Education Manager to assist them through the process. For details on how to contact your local representative, please click here.

Further information on this benefit is provided in Appendix 3 or in the Rio Tinto Quick Reference Guide – Salary Packaging Rent (company housing). FLY IN FLY OUT (FIFO) FLIGHTS An employee may salary package payments the cost of airfares in relation to travel between their usual place of employment and usual place of residence. Further information on this benefit is provided in Appendix 14 or in the Rio Tinto Quick Reference Card – Salary Packaging Flights Policy (Australia)

FLY IN FLY OUT (FIFO) CAR PARKING An employee may salary package the cost of parking their car at the airport when they are undertaking travel under a fly-in fly-out arrangement . Further information on this benefit is provided in Appendix 15 or in the Rio Tinto Quick Reference Card – Salary Packaging Airport Parking for FIFO Employees.

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RELOCATION EXPENSES (DOMESTIC)

An employee may salary package the cost of relocation expenses incurred in moving the employee and family members from one locality to another for employment purposes.

Before establishing relocation expenses, all Rio Tinto employees require an appointment with a local Customer Education Manager to assist them through the process. For details on how to contact your local representative, please click here.

Further information on this benefit is provided in Appendix 16 or in the Rio Tinto Quick Reference Guide – Salary Packaging Domestic Relocation Expenses

2.3 Concessionally Taxed Benefit Items MOTOR VEHICLE LEASE For some employees the inclusion of a motor vehicle in their salary package may be an attractive option. This may be arranged through a novated vehicle lease. The benefits of entering such an arrangement include:

• Choice of vehicle, within employer guidelines • Tax-free running costs, and • Competitive finance rates.

Under a novated lease arrangement an employee leases a motor vehicle from a financier using the standard finance lease. A Deed of Novation is then entered into between the employee, the employer and the financier under which the employee’s obligation to pay the lease payments under the finance lease is transferred to the employer for the term of the Deed of Novation. If employment ceases with the employer then the employee is directly responsible for all payments for the vehicle. The novated lease arrangement is governed by both the fringe benefits tax and income tax legislation and is also approved by the Australian Taxation Office. In addition to the lease payments, all running costs (i.e. annual registration and comprehensive insurance, fuel, servicing and repairs) in relation to the leased vehicle are also paid through the employee’s salary package. A fuel card (three options to choose from) will also be made available which provides the employee with a convenient way to purchase fuel. Only the Deed of Novation approved by your employer and which is available from Maxxia may be used. Further information on the types of leasing available is provided in Appendices 1 and 2.

REMOTE AREA RENTAL ASSISTANCE An employee may salary package rental payments in respect of non employer provided accommodation in a remote area, provided the home is the employee’s usual place of residence, is in a remote area, the employee is a current employee and the ATO requirements for a FBT concession are met. Further information on this benefit is provided in Appendix 4.

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REMOTE AREA REIMBURSEMENT OF INTEREST An employee may salary package the interest payments accrued on a housing loan provided the home is the employee’s usual place of residence, is in a remote area, the employee is a current employee and the ATO requirements for a FBT concession are met. Before undertaking remote area benefits, all Rio Tinto employees require an appointment with a local Customer Education Manager to assist them through the process. For details on how to contact your local representative, please click here.

Further information on this benefit is provided in Appendix 5 or in the Rio Tinto Quick Reference Guide – Salary Packaging Remote Housing Purchase & Interest Costs REMOTE AREA REIMBURSEMENT OF PURCHASING OR BUILDING A PROPERTY An employee may salary package the costs incurred on the purchase of a property in a remote area, or the purchase of land to build a home in a remote area provided the ATO requirements for a FBT concession are met. Further information on this benefit is provided in Appendix 6 or in the Rio Tinto Quick Reference Guide – Salary Packaging Remote Housing Purchase & Interest Costs REMOTE AREA HOUSING PROVISION OF GAS AND ELECTRICITY An employee may salary package the cost of gas or electricity provided that the employee resides in accommodation leased or owned by the employer. The accommodation must be in a prescribed remote area. Before undertaking remote area benefits, all Rio Tinto employees require an appointment with a local Customer Education Manager to assist them through the process. For details on how to contact your local representative, please click here.

Further information on this benefit is provided in Appendix 7.

REMOTE AREA HOLIDAY TRAVEL ASSISTANCE An employee residing in a prescribed remote area may salary package certain expenses incurred in relation to holiday travel (of more than 3 days annual or long service leave) from the remote area and return for themselves, their partner and children. Before undertaking remote area benefits, all Rio Tinto employees require an appointment with a local Customer Education Manager to assist them through the process. For details on how to contact your local representative, please click here.

Further information on this benefit is provided in Appendix 8.

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3. Taxation

The salary component of the salary package will continue to be subject to Pay As You Go (PAYG) taxation deductions in accordance with the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997. Each benefit available under the employer’s salary packaging policy falls into one of the following two (2) FBT categories:

• FBT exempt items; and • Concessionally taxed items. Concessionally Taxed Benefit Items FBT Free Benefit Items Novated Motor Vehicle Lease Financial Counselling Fees Associate Motor Vehicle Lease In House Childcare (Weipa) Remote Area – Provision of Gas & Electricity In House Gym (Weipa)

Remote Area Holiday Travel Assistance Remote Area Housing (Employer Provided) Self Funded Flights (FIFO)** Remote Area Rental Assistance* FIFO Airport Parking** Remote Area Reimbursement of Interest* Relocation Expenses (Domestic) Remote Area Reimbursement of Purchasing Tools of Trade or Building a Property* Airport Lounge Membership

** If employee is contracted to work FIFO * Employees living and working in a remote area on a residential contract

3.1 Fringe Benefits Tax Exempt Items Benefit items that are either specifically exempt or not subject to FBT because an employee could usually claim a tax deduction for the expense as an “otherwise deductible item” does not incur FBT. If “otherwise deductible” benefits are included in a salary package they cannot be claimed as a tax deductible item in an income tax return.

3.2 Novated Motor Vehicle Leasing – FBT Method Motor vehicles under a lease arrangement are concessionally taxed as a result of the calculation of their taxable value for the purpose of applying FBT. Assuming annual kilometres to be travelled by the vehicle, a percentage factor of 20% is applied to its cost price in order to calculate the taxable value. This is known as the “statutory formula method” of calculating “car fringe benefits tax”.

How the statutory formula method works The taxable value of a motor vehicle provided to the employee by the employer is calculated by the following formula: Taxable value = [(A x B x C) / D – E] where:

A = the cost value of the car

B = Statutory rate of 20%

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the number of days in the FBT year when the car was used or available for private C = use of the employee

D = the number of days in the FBT year

E = the employee contribution (if any)

The FBT liability of a motor vehicle provided to the employee by the employer is calculated using the following formula: FBT = Taxable Value x Gross-up factor x FBT rate For example, the FBT liability of a vehicle with a cost value of $25,000 would be $4,800, calculated as follows: Taxable Value = [($25,000 x 20% x 365) / 365] – $0 = $5,000 FBT = $5,000 x 2.0647 x 47% = $4,852.05

3.3 Novated Motor Vehicle Leasing – Employee Contribution Method (ECM) The Employee Contribution Method (ECM) is a common method for salary packaging a motor vehicle whereby the employee agrees to meet the running costs of the vehicle from a combination of pre and post-tax salary, and/or an after-tax contribution to the employer in return for salary packaging the vehicle. The combination of pre and post-tax salary is sent to Maxxia by the employer’s payroll system. The result is a reduction in the taxable value of the vehicle when calculating fringe benefits tax (FBT). The preferred option is to contribute to the employer (as an after-tax payment) an amount equal to the taxable value of the vehicle, the taxable value is reduced to nil, and hence the FBT is reduced to nil. Example: For a motor vehicle of value $25,000: Taxable value of vehicle = [(A x B x C) / D – E] Taxable Value= [($25,000 x 20% x 365) / 365 – E] Taxable Value= $5,000 – E If E = $5,000, then the Taxable Value (TV) = $0 FBT= TV x 2.0647 x 46.5% FBT= $0 x 2.0647 x 46.5% = $0 If the total running costs of the motor vehicle were $11,000 per annum, the employee using the ECM would now pay $6,000 from pre-tax salary and $5,000 from after–tax salary. Where the employee makes an after–tax contribution to the employer in respect of the novated lease, the employer will be liable to Goods and Services Tax (GST). The GST is one-eleventh of the employee contribution. In the example, the ECM is $5,000, and the GST payable will be $455. This GST amount is not passed on to the employee, but is offset against the Input Tax Credits (ITCs) available to the employer.

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3.4 Future Taxation The employee must also meet the cost of any current or future taxes payable by Maxxia or the Employer or the Employee under the Fringe Benefits Tax Assessment Act 1986, the Income Assessment Act 1936 and Income Tax Assessment 1997, and A New Tax System (Goods and Services Tax) Act 1999 and related legislation or similar Federal or State and Territory legislation.

3.5 Payment Summary Reporting Employers are required to report the “grossed-up” value of fringe benefits on the employee’s payment summary, where the total taxable value of the reportable benefits received in an FBT year exceeds $2,000. The grossed-up value is the sum of the value of the fringe benefit and FBT that would be payable on the fringe benefit. EXAMPLE: If the value of the benefit is $2,000 then the grossed-up value is calculated as follows:

Value of Fringe Benefit = $2,000 Notional FBT ($2,000 x 0.8692) = $1,738 “Grossed-up” value ($2,000 + $1,738) = $3,738

Only fringe benefits that attract an FBT liability are reported on the payment summary. From 1 July 2009, additional superannuation contributions made under a salary sacrifice arrangement will be included on an employee’s payment summary. Fringe benefits included in a salary package for the FBT year (e.g. 1 April to 31 March of the next calendar year) are reported on the payment summary for the financial year ending 30 June. The grossed-up value of fringe benefits will be included for most government surcharges and income tests including:

• Child support obligations; • Higher Education Loan Program (HELP/HECS) repayment; • Medicare levy surcharge; • Personal superannuation contributions Rebate; and • Rebate for Spouse Superannuation Contributions.

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4. Administration

The administration of salary packaging has been outsourced to Maxxia, a well-established provider of salary packaging services throughout Australia. The major functions to be performed by Maxxia in the administration of salary packaging are: § payment of the selected benefit item(s) in accordance with instructions provided by the employee in the Salary Application Form § provision of reports to employees § undertaking full reconciliation of salary packages § obtaining and storing benefit payment substantiation for Australian Taxation Office compliance and audit purposes § communicating directly with employees in relation to salary packaging, and § answering queries in relation to salary packaging. The details concerning the administration of salary packaging are set out below and should be carefully read prior to deciding to participate in salary packaging.

4.1 Administration of Benefit Funds Upon commencement of salary packaging the following will be deducted on a pro-rata basis from the employee’s salary:

• the cost of the selected optional benefit(s) • any FBT applicable to these benefits, and • the administration cost. The funds for the selected optional benefit(s) will be provided to Maxxia for disbursement. Payments for benefit items will only be made where sufficient funds exist at the time the payment is due or the employee submits a request for payment. Accordingly, when deciding to allocate money to a particular benefit, employees may wish to provide an additional amount to meet any anticipated increases in the cost of the payments.

4.2 Terms and Conditions The following terms and conditions will apply:

• benefit payments will only be made where Maxxia has received a salary package deduction • where insufficient package funds are available to cover a payment, no benefit payment will be made • all benefit payments will cease immediately for those employees that terminate or are on leave without pay where alternative arrangements have not been made • employees are only permitted to package benefits which form part of the employer’s approved package menu, and • an employee may request for any unspent funds to be returned to the employee through the payroll system when a change is made to the salary package.

These terms and conditions may be updated from time to time.

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4.3 Methods of Payment REGULAR PAYMENTS

Benefit(s) that have a fixed instalment amount and occur on a regular basis (e.g. motor vehicle lease payments) will be paid as a regular payment. The following details should be provided for these payments:

• name and address of where payments should be made • frequency of the payments • payment amount • commencement date for regular payments, and • BSB and account number for regular direct EFT and payments. NON REGULAR PAYMENTS

These payments are for benefit(s) that do not have a fixed instalment amount, or do not occur on a regular basis (e.g. motor vehicle registration). Payments will be made on receipt of a completed Reimbursement Claim Form. An employee who pays directly the cost of a benefit(s) will be reimbursed on receipt of a completed Reimbursement Claim Form. Reimbursement will be by electronic funds transfer (EFT) to the employee’s nominated bank or credit union account. Non-regular payments and reimbursements will be made by Maxxia, subject to the employee having sufficient package funds, within two business days of receiving an employee’s request. Please note that the bank may take another few days to clear funds.

4.4 Reconciliation A reconciliation of the salary package will occur when an employee alters their salary package. Any balance remaining in an employee’s salary package on termination of employment will be paid as salary and taxed accordingly. Where Maxxia pays any expense that relates to the employee’s salary package, which is in excess of the amount nominated, the employee will be required to repay such an expense.

4.5 Changed Circumstances An employee may alter their salary package at no cost during the FBT year (i.e. 1 April to 31 March of the next year).

4.6 Leave An employee may be required to cease or suspend any salary packaging arrangements during any period of leave. In most instances approval of any period of leave without pay will require the employee to cease or suspend salary packaging. The employee should notify Maxxia where an employee’s salary packaging arrangements will be affected as a result of the approval of paid or unpaid leave. Where possible this notification should be provided prior to the commencement of the leave period to enable the necessary administrative arrangements to be made.

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4.7 Ceasing Packaging An employee may elect at any time to cease salary packaging by giving at least twenty-eight (28) days notice in writing to Maxxia. In all circumstances where an employee’s salary packaging arrangements cease, it is necessary that the employee notify Maxxia of their cessation date. This enables Maxxia to send final payments and determine any action to be taken with account balances. Any unspent funds will be returned to the employer who will arrange for these funds to be returned to the employee via the payroll system. Note that these funds will be subject to PAYG taxation. Any outstanding fees owing at the time of termination of an employee’s salary package arrangements must be paid and will be deducted from the employee’s final termination payment (or as otherwise agreed as per the Salary Packaging Agreement). Any salary packaging arrangements will cease in the event that an employee is suspended without pay or when employment is terminated.

4.8 Reports Employees participating in salary packaging will receive quarterly reports in hard copy that provide details on payments made for selected benefit items. In addition the following online transaction reports are available: • Account Balance Report – shows the packaging account balance at the time of accessing the report; and • Transactions in Last 90 days – lists the salary packaging contributions received and details of payments made during the last 90 days.

The instructions for accessing online reports by the internet will be provided to the employee at the commencement of salary packaging. Employees can obtain an account balance by phone between the hours of 8.00am – 7.00pm (EST/EDST) by calling Maxxia on 1300 123 123.

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5. Administration Cost

Employees who choose to participate in salary packaging will be required to include within their salary package the administration cost.

Monthly Fee Administration Fee Description (including GST) Salary Packaging one FBT Free benefit only $4.58

Salary Packaging the Fly-In Fly-Out Flights Benefit Only (Airport Parking included) $16.50

Salary packaging a combination of benefit items excluding a Motor Vehicle Lease. $23.32

Salary packaging a Fully Maintained Novated lease or Associate lease only $27.50

Salary packaging a combination of benefit items including a Motor Vehicle Lease $42.41

Employees wishing to salary package a motor vehicle under a novated lease must speak with a Maxxia leasing consultant who will provide the employee with information and facts relevant to their proposed lease. During this consultation the employee will be required to complete a Novated Lease Checklist to confirm their understanding of the information and facts provided. Maxxia will forward a copy of the checklist to the employee together with their lease proposal.

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6. Where To From Here?

If you wish to enquire about salary packaging a novated motor vehicle lease, call Maxxia My Car on 1300 123 123 or contact your local state office to arrange a consultation with a Customer Education Manager.

Maxxia’s Customer Education Managers travel the width and breadth of all states in Australia on a regular basis and are available for consultations when in your area. Alternatively, if access is difficult, our Customer Education Managers can arrange a person to person Webinex consultation where there is an available internet connection.

If you are considering packaging remote area benefits, or merely consult on your available benefits and wish to make an appointment with a Customer Education Manager at your local state office or when they are out on site, please see below:

WA State Office (WA/NT/SA) Phone: 08 9363 7000 Email: [email protected]

NSW Office (QLD/NSW/VIC) [email protected]

For simple salary packaging transactions (FIFO Parking/FIFO Flights/Tools of Trade/Airport Lounge Membership), please contact Maxxia’s Customer Care Centre on 1300 123 123 for assistance in the establishment of your package.

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7. Further Information

A toll-free enquiry service has been established to provide information to employees in relation to salary packaging. This service does not provide financial advice. However, the operators can assist with general information regarding the salary packaging options that are available. The enquiry service operates from 8.00 a.m. to 7.00 p.m. (EST/EDST) Monday to Friday.

Vehicle Lease Enquiries: 1300 123 123 General Enquiries: 1300 123 123 Website Address: maxxia.com.au

7.1 Access to Website General information about salary packaging is available at maxxia.com.au Specific employer policy information, Application Forms and Declarations are available by logging on using your employer user id and password.

USER ID: RIOTINTO PASSWORD: AUSTRALIA

All participating employees can also access their salary packaging reports online. The instructions for accessing online reports using the internet will be provided when the employee commences salary packaging.

7.2 Privacy Policy Maxxia is bound by the National Privacy Principles contained in the Privacy Act 1988. Maxxia has procedures in place to ensure the strict confidentiality of personal client information. Maxxia’s Privacy Policy regulates the type of personal information we collect as well as the use of the personal information. Your personal information is used by Maxxia to provide you with salary packaging administration services, and in some cases to assist you in the acquisition of a motor vehicle under a novated lease. Maxxia may also use this information to keep you informed of new Maxxia products and services. You can obtain a copy of the Maxxia’s Privacy Policy by contacting us. Alternatively you can obtain a copy of the Privacy Policy from our website at maxxia.com.au

7.3 Access to Your Personal Information Under the National Privacy Principles you are generally entitled to access the personal information Maxxia holds about you. You can request access to your personal information by writing directly to Maxxia at:

The Privacy Officer Maxxia Pty Ltd Locked Bag 18 Collins Street East MELBOURNE VIC 8003 Or email Maxxia at [email protected]

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Where you are entitled to obtain access to your personal information, the time we require to give you access will depend on the type of information requested. In some circumstances we may charge you a fee for providing access to your personal information. The fee will be based on our costs in locating the information and the form of access you require. In all cases we will provide you with an estimate of the fee so that you can confirm that you still require access to your personal information.

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Appendix 1: ASSOCIATE MOTOR VEHICLE LEASE

DESCRIPTION An associate lease involves the leasing of a vehicle owned or being purchased by an associate of the employee (spouse, child over 18 year of age, family member or family company). The associate leases the vehicle to the employer who in turn provides it to the employee as part of their salary package.

What is • Direct lease payments. allowable? • Running costs (e.g. fuel, insurance, registration, servicing, maintenance and tyres). • Where capital improvements are made to the motor vehicle (e.g. sunroof, CD player) after the commencement of the lease, these items cannot be included in the salary package. • The cost of stamp duty and other costs related to the purchase of the motor vehicle can only be salary packaged as part of the lease cost, i.e. not as running costs.

Substantiation • Copy of Associate Lease documentation. • Dealer’s invoice evidencing the purchase price of the motor vehicle if the vehicle is purchased at the commencement of the Associate Lease. • Independent valuation of the motor vehicle if the vehicle is already owned or being purchased by the “associate” prior to the commencement of the associate lease. • Original receipts must be submitted for reimbursement of running costs incurred by the employee where a fuel card is not used. • Original invoices must be submitted where an employee is seeking a direct payment for registration or insurance.

Taxation Issue • Concessional FBT applies and is calculated by using the statutory formula method. • Goods and Services Tax does not apply to Motor Vehicle Registration, but does apply to the component relating to compulsory third party insurance. • Input Tax Credits are available. • The cost of a novated motor vehicle salary packaged are “grossed up” and may be included on the employee’s payment summary, as a fringe benefit. • Where the employee adopts the ECM and reduces the FBT on the motor vehicle to Nil, the benefit will not be included on the employee’s payment summary.

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Employee • A ‘Motor Vehicle-Fuel and Oil Expenses Declaration’ will be required where Declaration payments towards the running costs are being claimed to reduce the taxable value of the motor vehicle. • Repayment of any FBT incurred is the responsibility of the employee

Form of • Lease payments – made directly to the associate. Payment • Motor vehicle charge card – fuel and maintenance

Package Cost Lease payments, running costs plus any applicable FBT.

Additional • The associate party in an associate lease arrangement is strongly encouraged to Information take their own professional advice in relation to the financial, taxation and legal considerations for them in participating in the associate lease transaction. • Where input tax credits (i.e. a refund of GST) are available, a tax invoice must be submitted with the claim form. • If a complying tax invoice is not provided, input tax credits will not be processed by Maxxia.

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Appendix 2:

NOVATED MOTOR VEHICLE LEASE

DESCRIPTION This is an arrangement whereby a motor vehicle is provided to an employee by the employer through a novated lease, within the employer’s guidelines.

You must use your employer’s Deed of Novation, which is available from Maxxia.

What is Allowed? • Direct Lease payments. • Running costs (fuel, insurance, registration, servicing and maintenance e.g. tyres).

• The cost of stamp duty and other costs related to the purchase of the motor vehicle can only be salary packaged as part of the lease cost, i.e. not as running costs.

What is not • Capital improvements made to the motor vehicle (e.g. sunroof, Allowed? CD player) after the commencement of the lease cannot be included in the salary package.

Employee • The Employee Contribution Method (ECM) enables an employee to reduce the Contribution Method FBT of a novated motor vehicle to nil by making a post tax contribution to the operating costs of the vehicle. • The amount of employee’s contribution required must be equal to the taxable value of the motor vehicle. • Contributions made by an employee are subject to GST. • The GST on the employee contributions is calculated as 1/11th of the amount contributed by the employee.

Taxation Issues • Goods and Services Tax does not apply to Motor Vehicle Registration, but does apply to the component relating to compulsory third party insurance. • The Type 1 gross-up factor of 2.0802 applies to a ‘Novated Motor Vehicle Lease’. • Input Tax Credits are available. • The cost of a novated motor vehicle salary packaged are “grossed up” and may be reported on the employee’s payment summary as a fringe benefit. • Where the employee adopts the ECM and reduces the FBT on the motor vehicle to Nil, the benefit will not be reported on the employee’s payment summary.

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Leasing of Luxury • When an employer novates a vehicle to an employee and the cost of the Vehicles vehicle exceeds the luxury car tax limit of $57,581 (for accounting and taxation purposes), different taxation rules apply to the treatment of this vehicle from a company taxation perspective. In these circumstances the employer’s entitlement to claim an income tax deduction in respect of the luxury car lease is reduced. In order to compensate the employer for the partial loss of the tax deduction in respect of the luxury car lease, Maxxia calculates the loss of tax deduction (referred to be Maxxia as the Luxury Car Depreciation Allowance) and includes that amount in an employee’s novated lease proposal. The LCDA is retained by the employer to ensure that they are not disadvantaged from a taxation and financial aspect due to the employee entering into a novated luxury lease.

Substantiation • Deed of Novation (signatory page and front page of lease, including the execution date, only required). • Copy of the finance schedule from the finance lease. • Dealer invoice for the purchase price of the motor vehicle. • Original invoices must be submitted where an employee is seeking a direct payment for registration or insurance.

Form of Payment • Lease payments – made directly to financier. • Motor vehicle charge card – fuel and maintenance.

Additional • Where input tax credits (i.e. a refund of GST) are available, a tax invoice Information must be submitted with the claim form. • If a complying tax invoice is not provided, input tax credits will not be processed by Maxxia.

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Appendix 3: REMOTE AREA HOUSING (EMPLOYER PROVIDED)

DESCRIPTION A remote area housing fringe benefit will arise where an employer provides a housing benefit to an employee, where the employee lives and works in a prescribed remote area. Where the arrangement meets certain conditions, the provision of the housing benefit by the employer to the employee will be exempt from FBT.

Applicable Section Section 58ZC of the Fringe Benefit Tax Assessment Act 1986 provides for of the FBT Act the exemption from FBT subject to certain conditions being met.

Conditions for the To qualify for the FBT exemption, the following conditions must be met: FBT Exemption or • A ‘housing benefit must be provided by an employer to the employee. A housing benefit is a benefit that arises where an employee is granted a right FBT Concession to occupy, as his/her usual place of residence, a unit of accommodation provided by an employer. • The employee must live in a remote area. • The employee must work in a remote area. • The employee must be a current employee. Past and future employees do not qualify for the exemption. • It is necessary for the employer to arrange or provide remote area benefits to their employees because: – the nature of the employer’s business is that employees are liable to be frequently required to change their usual place of residence; or – there was not sufficient suitable residential accommodation available in the area in which the employee is employed; or – it is customary in the employer’s industry to provide remote area benefits to their employees. • To be customary, the ATO must be satisfied that it is normal for employees of that class or job description in that industry to be provided with same or similar benefits.

Tax Effect If all of the above conditions are satisfied, the provision of the remote area housing benefit by the employer to the employee will be exempt from FBT. Goods and Services Tax does not apply, and Input Tax Credits are not available.

Substantiation The decision as to whether an employee lives and works in a prescribed remote Requirements area lies with the employer. For the benefit to be made available to the employee, the employer must sign the ‘Employer Declaration’. If the employer does not sign the declaration, the benefit will not be made available to the employee.

Calculating the Due to the exemption from FBT, the taxable value of this benefit is NIL. Taxable Value

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Calculating the Cost The cost to the employee’s salary package will be the amount of rent paid by to the Employee’s the employee in respect of the housing benefit provided by the employer. Package

Calculating the Net Assumptions: Benefit to the • Annual salary $120,000 Employee • Rental payment $20,000 • PAYG rates effective 1 July 2012. Input tax credits in relation to the Administration Fee are passed back to the employee.

Item No Packaging Packaging

Salary $120,000 $120,000

Rental payment $0 ($20,000)

FBT $0 $0

Average Administration $0 ($280) fee

Input tax credits $0 $25

Net Salary $120,000 $99,745

Tax & Medicare ($34,431) ($26,553)

Net Salary $85,568 $73,192

Rental payment ($20,000) $0

Net Cash Salary $65,568 $73,192

Net Benefit n/a $7,624

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Appendix 4: REMOTE AREA RENTAL ASSISTANCE

DESCRIPTION A remote area housing rental assistance fringe benefit will arise where the employee lives and works in a prescribed remote area and enters into a tenancy agreement with the owner of the property, or a real estate agent in respect of a unit of accommodation. The housing benefit (or unit of accommodation) is not provided by the employer. Where the arrangement meets certain conditions, the rental incurred by the employee will be treated concessionally for FBT purposes. The taxable value of the benefit is reduced by 50% of the amount paid by the employee (that is, the recipient’s expenditure). This must not be confused with the 50% reduction in the taxable value of other remote area benefits.

Applicable Section Section 60(2A) of the Fringe Benefit Tax Assessment Act 1986 provides for of the Fringe the concessional FBT treatment subject to certain conditions being met. Benefit Tax Assessment Act 1986

Tax Effect If all of the above conditions are satisfied, the remote area housing rental assistance benefit will be treated concessionally for FBT purposes. Goods and Services Tax does not apply, and Input Tax Credits are not available.

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Calculating the The method used to calculate the taxable value of the benefit is as follows: Taxable Value Method - Salary package 50% of the rental paid. Taxable value is reduced by 50% of the amount paid by the employee. FBT calculated on NIL taxable value.

Calculating the Cost The cost to the employee’s salary package will be the amount of rent paid by to the Employee’s the employee. Package

Calculating the Net Method – Packaging 50% of the gross rental paid Benefit to the Assumptions: Employee • Annual salary $120,000 • Rental payment $20,000. Amount packaged $10,000 • PAYG rates effective 1 July 2017. Input tax credits in relation to the Administration Fee are passed back to the employee.

Item No Packaging Packaging

Salary $120,000 $120,000

Rental Payment $0 ($10,000)

FBT $0 $0

Average Administration $0 ($280) Fee

Input Tax Credits $0 $25

Net Salary $120,000 $109,745

Tax & Medicare ($34,432) ($30,433)

Net Salary $85,568 $79,312

Rental Payment ($20,000) ($10 000)

Net Cash Salary $65,568 $69,312

Net Benefit n/a $3,744

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Appendix 5: REMOTE AREA REIMBURSEMENT OF INTEREST

DESCRIPTION A remote area reimbursement of interest benefit will arise where an employee enters into a loan arrangement for the purpose of purchasing a dwelling located in a remote that is to be used as the employee’s usual place of residence. Where there is a draw down facility on the mortgage account which is accessed by the employee, the funds must be used solely for the construction of an extension to the remote area dwelling. If the funds are used for any other purpose, the FBT concession for this benefit is no longer available. Where the arrangement meets certain conditions, the interest on the loan incurred by the employee will be treated concessionally for FBT purposes. A 50% reduction in the taxable value of the reimbursement of interest benefit will apply.

Applicable Section Section 60(2) of the Fringe Benefit Tax Assessment Act 1986 provides for the concessional FBT treatment subject to certain conditions being met. of the Fringe Benefit Tax Assessment Act 1986

Tax Effect If all of the above conditions are satisfied, the remote area reimbursement of interest benefit will be treated concessionally for FBT purposes. Goods and Services Tax does not apply, and Input Tax Credits are not available.

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Calculating the Due to the concessional FBT treatment, the taxable value of the reimbursement of interest benefit is reduced by 50% of the cost of the interest per annum plus Taxable Value the applicable FBT.

Calculating the Cost The cost to the employee’s salary package will be the amount of interest paid by to the Employee’s the employee in respect of the housing loan benefit plus the applicable FBT. Package

Calculating the Net Assumptions: Benefit to the • Annual salary $120,000 Employee • Interest reimbursed $20,000 • PAYG rates effective 1 July 2012. Input tax credits in relation to the Administration Fee are passed back to the employee.

Item No Packaging Packaging

Salary $120,000 $120,000

Interest Payment $0 ($20,000)

FBT $0 ($8,868)

Average Administration $0 ($280) Fee

Input Tax Credits $0 $25

Net Salary $120,000 $91,877

Tax & Medicare ($34,432) ($23,074)

Net Salary $85,568 $67,803

Interest Payment ($20,000) $0

Net Cash Salary $65,568 $67,803

Net Benefit n/a $2,235

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Appendix 6: REMOTE AREA REIMBURSEMENT ON PURCHASING OR BUILDING A PROPERTY

DESCRIPTION A remote area reimbursement on purchasing of building a property benefit will arise where the employee incurs costs in connection with the purchasing a property in a remote area, the purchase of land to build a home in a remote area, or the loan deposit and principal. Where the arrangement meets certain conditions, the costs incurred by the employee will be treated concessionally for FBT purposes. A 50% reduction in the taxable value of the reimbursement on purchasing or building a property benefit will apply.

Applicable Section Section 60(4) of the Fringe Benefit Tax Assessment Act 1986 provides for the of the Fringe concessional FBT treatment subject to certain conditions being met. Benefit Tax Assessment Act 1986

Tax Effect If all of the above conditions are satisfied, the remote area reimbursement of purchasing or building a property benefit will be treated concessionally for FBT purposes. Goods and Services Tax does not apply, and Input Tax Credits are not available.

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Substantiation The decision as to whether an employee lives and works in a prescribed remote area lies with the employer. For the benefit to be made available to the Requirements employee, the employer must sign the ‘Employer Declaration’. If the employer does not sign the declaration, the benefit will not be made available to the employee. The employee must provide a ‘Copy of Offer and Acceptance’ and ‘Settlement Statement’ showing the purchase date and the expenses incurred. The employee must also provide statements and invoices substantiating other costs such as stamp duty.

Calculating the Due to the concessional FBT treatment, the taxable value of the reimbursement Taxable Value of purchasing or building a property benefit is reduced by 50%.

Calculating the Cost The cost to the employee’s salary package will be the amount of the to the Employee’s reimbursement received by the employee in respect of the purchasing or building a property benefit plus the applicable FBT. Package

Calculating the Net Assumptions: Benefit to the • Annual salary $150,000 Employee • Building or purchasing costs reimbursed $70,000 • PAYG rates effective 1 July 2017.

Item No Packaging Packaging

Salary $150,000 $150,000

Purchasing or Building $0 ($70,000) Expenses

FBT $0 ($31,038)

Average Administration $0 ($280) Fee

Net Salary $150,000 $48,682.30

Tax & Medicare ($46,188) ($8,316)

Net Salary $103,812 $40,366

Salary Packaging re- $0 $70,000 imbursement

Net Cash Salary $103,812 $110,366

Net Benefit n/a $6,554

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Appendix 7: REMOTE AREA – PROVISION OF GAS AND ELECTRICITY

DESCRIPTION A remote area residential fuel benefit will arise where the employee incurs costs in connection with residential fuel to be used in connection with their usual place of residence in a remote area. Residential fuel is defined to mean any form of fuel (including electricity) for use for domestic purposes. Where the arrangement meets certain conditions, the costs incurred by the employee will be treated concessionally for FBT purposes. A 50% reduction in the taxable value of the remote area residential fuel benefit will apply.

Applicable Section Section 59 of the Fringe Benefit Tax Assessment Act 1986 provides for the of the Fringe concessional FBT treatment subject to certain conditions being met. Benefit Tax Assessment Act 1986

Conditions for the To qualify for the FBT concession, the following conditions must be met: FBT Exemption or • The benefit is an expense payment fringe benefit, a property fringe benefit, FBT Concession or a residual fringe benefit in respect of remote area residential fuel. • The employee must be in receipt of a remote area housing benefit, a housing loan benefit, or a housing rent benefit.

Tax Effect If all of the above conditions are satisfied, the remote area residential fuel benefit will be treated concessionally for FBT purposes. Goods and Services Tax applies, and Input Tax Credits are available.

Substantiation The decision as to whether an employee lives and works in a prescribed remote area lies with the employer. For the benefit to be made available to the Requirements employee, the employer must sign the ‘Employer Declaration’. If the employer does not sign the declaration, the benefit will not be made available to the employee. The employee must provide original receipts and tax invoices substantiating the residential fuel costs when seeking reimbursement.

Calculating the Due to the concessional FBT treatment, the taxable value of the remote area Taxable Value residential fuel benefit is reduced by 50%.

Calculating the Cost The cost to the employee’s salary package will be the amount of the to the Employee’s reimbursement received by the employee in respect of the residential fuel benefit plus the applicable FBT. Package

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Calculating the Net Assumptions: Benefit to the • Annual salary $120,000 Employee • Residential fuel expense $5,000 • PAYG rates effective 1 July 2017. Input tax credits in relation to the Administration Fee are passed back to the employee.

Item No Packaging Packaging

Salary $120,000 $120,000

Residential Fuel $0 ($5,000)

FBT $0 ($2,444)

Average Administration $0 ($280) Fee

Input Tax Credits $0 $480

Net Salary $120,000 $112,756

Tax & Medicare ($34,432) ($31,607)

Net Salary $85,568 $81,149

Residential Fuel ($5,000) $0

Net Cash Salary $80,568 $81,149

Net Benefit n/a $581

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Appendix 8: REMOTE AREA – HOLIDAY TRAVEL ASSISTANCE

DESCRIPTION A remote area holiday travel assistance benefit will arise where the employee incurs costs in connection with holiday travel (of more than 3 days annual or long service leave) from the remote area and return. The benefit includes the cost of the holiday travel for the employee, their partner and child/children. Where the arrangement meets certain conditions, the costs incurred by the employee will be treated concessionally for FBT purposes. The taxable value of the remote area holiday travel assistance benefit will depend on the destination of the travel undertaken by the employee..

Applicable Section Sections 60A and 61 of the Fringe Benefit Tax Assessment Act 1986 provides for the concessional FBT treatment subject to certain conditions being of the Fringe met. Benefit Tax The concessional FBT treatment is dependent upon the employee’s ‘point of Assessment Act hire’ (as listed in their employment agreement) and the travel destination. 1986

Conditions for the To qualify for the FBT concession, the following conditions must be met: FBT Exemption or • The benefit is an expense payment fringe benefit, a property fringe benefit, FBT Concession or a residual fringe benefit in respect of transport, or accommodation, or meals en route. • The employee, apart from temporary absences, performs their duties of employment in a remote area. • The transport must be between the remote area employment location and • the relevant capital city in that state or territory, or • another place. • Transport provided to the employee must be during a period of recreation leave. Spouse or Child Resides With the Employee • The transport must be between a place at or near the remote area employment location and another place (i.e. the holiday destination) Spouse or Child Does Not Reside With the Employee • The transport must be between the place where they meet the employee and another place (i.e. the holiday destination)

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Tax Effect The following expenses can be salary packaged by the employee: • Air fares • Meals (en route only) • Accommodation (en route only) • Travel to and from the holiday destination in the employee’s own car • Hire car and hire car costs (en route only); and • Any costs associated with the transport to and from the holiday destination. Goods and Services Tax applies, and Input Tax Credits are available. Take note that costs incurred at the destination, such as meals, accommodation, and car hire, are not to be reimbursed to the employee. Expenses incurred at the destination are not eligible for the concessional FBT treatment for remote area holiday travel assistance. For a remote area travel assistance benefit to be an excluded benefit and not included on an employee’s payment summary, the travel must be within Australia to major population centres. As a result, all overseas travel and domestic travel to non-major population centres (and associated costs) will be a reportable fringe benefit.

Substantiation The decision as to whether an employee lives and works in a prescribed remote area lies with the employer. For the benefit to be made available to the Requirements employee, the employer must sign the ‘Employer Declaration’. If the employer does not sign the declaration, the benefit will not be made available to the employee. The employee must provide original receipts and tax invoices substantiating the holiday transport costs when seeking reimbursement.

Calculating the • Due to the concessional FBT treatment, the taxable value of the remote area Taxable Value holiday travel assistance benefit is generally reduced by 50%. • Where the travel is to the employee’s ‘point of hire’, or the capital city in the State or Territory in which the remote worksite is located, the taxable value of the remote area holiday travel assistance benefit (in respect of en route costs only) is reduced by 50%. • Where the travel is not to the employee’s ‘point of hire’, or the capital city in the State or Territory in which the remote worksite is located, the taxable value of the remote area holiday travel assistance benefit is reduced by the lower of 50% of the taxable value of the benefit, or 50% of the lowest return economy airfare from the remote area to the capital city of the State or Territory in which the remote worksite is located. For the Northern Territory, Adelaide is taken to be the relevant capital city for the calculation of the benefit. • The lowest return economy airfare from the remote area to the capital city of the State or Territory in which the remote worksite is located is referred to as the Benchmark Travel Amount (BTA).

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• When the remote area is the same as the point of hire, the taxable value of the benefit is reduced by 50%. • The reduction of the taxable value of the benefit in each of the above scenarios cannot exceed 50%.

Calculating the Cost The cost to the employee’s salary package will be the amount of the to the Employee’s reimbursement received by the employee in respect of the remote area holiday Package travel assistance benefit plus the applicable FBT. The estimated amount of FBT will be calculated at the time of establishing the employee’s salary package and deducted from the employee’s pre-tax salary in addition to the cost of the benefit.

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Calculating the Net Assumptions Benefit to the Point of hire is Perth Employee Employee lives and works in the remote area of Mudgee Travel to the Employee travels from Mudgee to Perth employee’s point of The costs incurred are: hire, or the capital city in the State or Airfares $2,000 Territory in which Meals (en route) $500 the remote workplace is Accommodation (at the $1,000 located – taxable destination) value is reduced by TOTAL $3,500 50%

FBT Calculation FBT = [($3,500 - $1,000) x 50%] x 2.0647 x 46.5% FBT = $1,200.10 Cost to Salary Package Package cost = $2,500 + $1,200.10 Package cost = $3,700.10 Note that the accommodation costs have not been included in the above calculation and must not be reimbursed to the employee as they are expenses incurred at the destination and not en route as required by the FBT legislation.

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Calculating the Net Assumptions Benefit to the Point of hire is Perth Employee Employee lives and works in the remote area of Mudgee Travel not to the Employee travels from Mudgee to Adelaide employee’s point of The costs incurred are: hire – taxable value Airfares $1,000 is reduced by the Meals (en route) $500 lower of 50% of the taxable value of the Accommodation $0 benefit or 50% of TOTAL $1,500 the Benchmark Travel Amount The Benchmark Travel Amount Mudgee to Perth is $1,600. As the taxable value of the benefit $1,500) is less than the benchmark travel amount ($1,600), the taxable value of the benefit is reduced by $750 (i.e. $1,500 x 50%). FBT Calculation FBT = ($1,500 - $750) x 2.0647 x 46.5% FBT = $720.06 Cost to Salary Package Package cost = $1,500 + $720.06 Package cost = $2,220.06

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Calculating the Net Assumptions Benefit to the Point of hire is Mudgee Employee Employee lives and works in the remote area of Mudgee The remote area Employee travels from Mudgee to Melbourne and the point of hire The costs incurred are: are the same – Airfares $500 taxable value is Meals $150 reduced by 50% Accommodation $0 TOTAL $650

FBT Calculation FBT = ($650 x 50%) x 2.0647 x 46.5% FBT = $312.01 Cost to Salary Package Package cost = $650 + $312.01 Package cost = $962.01

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Appendix 9: IN HOUSE CHILDCARE EXPENSES

DESCRIPTION An employee may salary package the cost of child care expenses incurred at Cape Kids Childcare Centre in respect to the provision of the child care facility located at Weipa.

What is Allowable The fees charged by the provider to the employee in relation to the provision of the care.

Taxation Issues • In-house child care expenses are not reported on the employee’s payment summary as a fringe benefit. • Goods and Services Tax does not apply to in-house child care expenses. • Fringe Benefits Tax does not apply. • Input tax credits are not available.

Substantiation • Direct payment to the in-house child care provider. Setup as a regular benefit.

Employee • Not required Declaration

Form of Payment • Direct payment to the in-house child care provider, Rio Tinto Aluminium. Set up as a regular benefit. • Reimbursements are not permitted in respect of the in-house child care.

Package Cost Cost of the in-house child care fees provided by the Child Care Centre only.

Additional Not applicable. Information

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Appendix 10: IN HOUSE GYM

DESCRIPTION An employee may salary package the cost of Fees for the gymnasium facilities on site at the Weipa Fitness Centre at Weipa

What is Allowable The cost of the membership fee only. No other items may be salary packaged in relation to this benefit.

Taxation Issues • Exempt fringe benefits are not reported on the employee’s payment summary (group certificate).

Substantiation • An employee must submit the original tax invoice and original receipt for reimbursement of expenses incurred by the employee in relation to this benefit item.

Employee Not required Declaration

Form of Payment • Reimbursement to employee where original receipt(s)/tax invoice(s) have been forwarded to Maxxia.

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Appendix 11: AIRPORT LOUNGE MEMBERSHIP

DESCRIPTION An employee may salary package the cost of airport lounge membership.

What is Allowed? • The cost of the membership.

Taxation Issues • Airport lounge membership is exempt from FBT and is not reported on the employee’s payment summary as a fringe benefit. • Goods and Services Tax applies to airport lounge membership. • Input Tax Credits are available. • Fringe Benefits Tax does not apply.

Substantiation • Original receipt/tax invoice must be submitted when seeking reimbursement of the membership fees. • Original invoice must be submitted where an employee is seeking a direct payment for the membership fees.

Employee Not required. Declaration

Form of Payment • Reimbursement to employee where the original receipt/tax invoice and a completed claim form has been forwarded to Maxxia. • Direct payment to the third party where the employee submits the original account.

Package Cost Cost of the airport lounge membership.

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Appendix 12: FINANCIAL COUNSELLING FEES

DESCRIPTION A staff member may salary package the cost of the provision of salary packaging advice from a financial adviser, or accountant when consulting on their tax situation, sepcifically regarding salary packaging.

What is Allowed? The professional fees charged by the adviser or accountant to the employee in relation to the provision of the advice in regards to their salary packaging arrangements.

Taxation Issues • Financial counselling fees are “otherwise deductible” and are not reported on the employee’s payment summary as a fringe benefit. • Goods and Services Tax applies to financial counselling fees. • Input Tax Credits are available. • Fringe Benefits Tax does not apply.

Substantiation Submit the original receipt/tax invoice and a claim for reimbursement of expense incurred.

Employee A completed ‘Expense Payment Fringe Benefit Declaration’ must be submitted Declaration to Maxxia on each occasion that a reimbursement claim is made.

Form of Payment Reimbursement to staff where the original receipt/tax invoice and a completed claim form has been forwarded to Maxxia.

Package Cost Cost of the professional fees.

Additional • Where input tax credits are available, a tax invoice must be submitted with Information the claim form. • If a complying tax invoice is not provided, input tax credits will not be processed by Maxxia.

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Appendix 13: ELIGIBLE WORK RELATED ITEM – TOOLS OF TRADE

DESCRIPTION An employee may salary package the cost of tools of trade. Tools of trade are those used by the employee in the normal course of their employment and are eligible for an income tax deduction. Only operational-based employees working in Dampier, Lake MacLeod or Port Hedland are eligible to package this benefit.

What is Allowed? • The tool(s) of trade must be used primarily in the course of performing employment related duties. • Tools of trade may include manually operated or electrically powered hand tools. • Toolboxes and tool belts may be included. • Major equipment, such as a lathe or drill press, does not qualify under this benefit item. • The employee is not entitled to claim a tax deduction for tools of trade that is included in their salary package.

Taxation Issues • Goods and Services Tax applies to tools of trade. • Input Tax Credits are available. • Tools of trade are exempt from FBT and are not reported on the employee’s payment summary as a fringe benefit. • FBT does not apply.

Substantiation • Original receipts/tax invoices must be submitted when seeking reimbursement of expenses. • Purchase documents must be submitted that indicate the make and type of tool.

Employee The employee must complete the ‘Salary Packaging Claim Form for Work Declaration Related Items’.

Form of Payment Reimbursement to employee where the original receipt/tax invoice and a completed claim form has been submitted to Maxxia.

Package Cost Cost of the tools of trade.

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Appendix 14: SELF FUNDED FLIGHTS - FLY IN FLY OUT (FIFO) ARRANGE- MENTS

DESCRIPTION An employee may salary package the cost of self funded airfares in respect of travel between their usual place of employment and their usual place of residence under a fly-in fly-out arrangement.

What is Allowed? • The cost of the self funded airfares for the employee in relation to travel between their usual place of employment and usual place of residence • Only self funded airfaires for the employee are eligible for FIFO

What’s not Allowed • The cost of airfares not in relation to the employee • Holiday travel • Travel that is not in relation to the employee returning to their usual place of employment or usual place of residence

Taxation Issues To qualify for the exemption the following conditions must be satisfied: • The employee’s usual place of employment is in a remote area • The employee is required to return to their usual place of residence on days off work • The employee is provided with transport between their usual place of employment and usual place of residence • The Goods and Services Tax applies to FIFO expenses • Fringe Benefits Tax does not apply

Substantiation Tax Invoice to be supplied by AMEX for direct payment.

Form of Payment Direct payment to the third party provider. Reimbursements are not allowed.

Package Cost Cost of the travel

Additional A tax invoice must be submitted by the third party for payment Information

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Appendix 15: FLY-IN FLY-OUT (FIFO) CAR PARKING

DESCRIPTION An employee may salary package the cost of parking their car at the airport when they are undertaking travel under a fly-in fly-out arrangement .

What is Allowed? • The cost of car parking at the airport when the employee flies to a designated remote area under a FIFO arrangement.

Taxation Issues • The Goods and Services Tax applies to FIFO car parking expenses. • Fringe Benefits Tax does not apply and is an exempt benefit under section 58G of the FBT Act. • FIFO car parking expenses is not a reportable fringe benefit.

Substantiation Submit the original tax invoice for the FIFO car parking expense and a copy of the FIFO roster to substantiate that the expense was incurred when the employee was is a remote area under a FIFO arrangement.

Employee Not applicable. Declaration

Form of Payment Reimbursement to the employee’s nominated bank account.

Package Cost Cost of the FIFO car parking.

Additional A tax invoice and FIFO roster must be submitted with the completed claim form. Information

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Appendix 16: RELOCATION EXPENSES (DOMESTIC)

DESCRIPTION An employee may salary package the cost of relocation expenses incurred in moving the employee and family members from one locality to another for employment purposes.

What is Allowed? • Relocation travel costs, including meals and accommodation en route, of the employee and family members. • The cost of removal of furniture and personal effects, including insurance and storage. • The costs of temporary accommodation, both at the old locality and the new locality. • The cost of leasing furniture for the temporary accommodation. • The cost of connecting telephone, electricity or gas services to the temporary accommodation. • Necessary meal costs at a hotel, motel or restaurant (in excess of $2 per meal per adult or $1 per child under 12 years). • Advances to cover such items as a rental bond or electricity or gas deposits, provided the advance is repayable within one year. • Home sale and purchase costs, including stamp duty, legal fees, estate agent’s commission, buyer’s agent fees and mortgage insurance.

Taxation Issues • The cost of relocation expenses are not reported on the employee’s payment summary as a fringe benefit. • The Goods and Services Tax applies to relocation costs where incurred within Australia. • Input Tax Credits are available. • Fringe Benefits Tax does not apply to relocation expenses.

Substantiation • Submit the original receipt/invoice for reimbursement of the expense incurred by the employee. • The receipt must provide the following details: – Date of payment – Amount of payment

Employee Not required. Declaration

Form of Payment Reimbursement to the employee where the original receipt/tax invoice and a completed claim form is submitted to Maxxia.

Package Cost Cost of the relocation expenses.

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Additional • Where input tax credits (i.e. a refund of GST) are available, a tax invoice must be Information submitted with the claim form. • If a complying tax invoice is not provided, input tax credits will not be processed by Maxxia.

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