Sample Employee Salary Package (Australia) 

Purpose

This example describes how you can use the salary packaging function.

Prerequisites

You have created the following salary components in Customizing:

·         Total package *

·         Company super 1 *

·         Employee super 1 *

·         Fringe benefits tax (FBT)

·         Company car 

·         Basic Salary *

·         Total cost *

Process Flow

The following process illustrates how your new employee, Sally Packet, arrives at her optimal salary package:

1.       You enter Sally‘s salary components in the relevant infotypes.

2.       You follow the instructions described in Modeling a Salary Package so that Sally‘s salary package contains the salary components listed above with *. The resulting salary package is as follows:

Salary Component New Amount

Total package          $60,000

Company super 1     $4,200

Employee super 1    $600

Basic salary                        $59,400

Total cost                $64,200

The total package amount is based on the amount entered in the model wage type /TPA in the Basic Pay infotype (0008).

3.       Based on her organisational assignment and pay scale, Sally is eligible for other salary components (as listed in the left column of the Salary Packaging screen, transaction P16B_ADMIN). She would therefore like to see what her salary package would look like if she had a company car and paid FBT.

Insert the salary component company car and FBT. Sally’s salary package is now as follows:

Salary Component New Amount

Total package          $60,000

Company super 1     $4,200

Employee super 1    $600

Company car           $15,000

FBT                        $3672

Basic salary                        $40,728

Total cost                $64,200

Note: The salary component basic salary has changed to accommodate the salary components company car and FBT.

If the salary component total package is applicable for an employee, the employee must also have at least one salary component in their package with the nature of the salary component as Remainder. The reason for this is that the employee's total package is a fixed amount. The salary component marked as Remainder (which is set up in the details of view V_T5W7A) will fluctuate according to other salary components added or subtracted to ensure that the total package amount remains the same.

4.       Sally now decides that she does not want the company car. Therefore, takes out the components company car and FBT (with the arrow). Sally’s salary now reverts to the original figures calculated in point 2.

Result

Both Sally and her company agree to the salary package, therefore, you save the package.

When you save the salary package, the system automatically updates all the relevant infotypes.