What are earnings for the high income threshold?


In this explanation I have included a passage from the Fair Work Commission’s unfair dismissal benchbook.


“Earnings include:

  • wages
  • such other amounts (if any) worked out in accordance with the Regulations
  • amounts dealt with on the employee’s behalf or as the employee directs, and
  • the agreed money value of non-monetary benefits.

The Commission has a discretion to include a benefit that is not a payment of money and that is not a ‘non-monetary benefit’ (within the meaning of s.332(3) of the Fair Work Act). It may do so where it is satisfied that it is appropriate to take it into account, and it can attribute a ‘real or notional’ value to the benefit, in default of any agreement between the parties.

Earnings do not include:

  • payments the amount of which cannot be determined in advance such as: o commissions

o incentive-based payments and bonuses, or

o overtime (except guaranteed overtime);


  • reimbursements (such as per diem payments), and
  • compulsory contributions to a superannuation fund (superannuation guarantee).
Per diem means ‘by the day’—a sum of money paid to an employee every day, such as a meal allowance or accommodation allowance.



Compulsory superannuation contributions are not included in the calculation of an employee’s earnings. Any superannuation paid in excess of compulsory contributions may be included in the calculations of the employee’s earnings.


Where an employer provides an employee with a fully maintained vehicle the value of the private use of the vehicle can be included in the annual rate of earnings. Use for business purposes is excluded and only the proportion of private usage can be counted as remuneration.

Where there is no agreed monetary value of the benefit of the private use of a motor vehicle, the Commission will generally apply the following formula:

1. Determine the annual distance travelled by the vehicle in question.

2. Determine the percentage of that distance that was for private use.

3. Multiply the above two figures to obtain the annual distance travelled for private purposes.

4. Estimate the cost per kilometre for a vehicle of that type (may be obtained from RACV, NRMA or other similar motoring association).

5. Multiply the annual distance travelled for private purpose (obtained at step 3) by the estimated cost per kilometre.


The figure obtained is the value of the vehicle to the employee and is added to remuneration.



Fringe benefit tax

Fringe benefit tax is a tax that is imposed on an employer when they provide a benefit to an employee, such as personal use of a company owned vehicle.

Fringe benefit tax may or may not be counted as earnings depending on whether the amount is found to be an amount dealt with as the employee directs.

  • Where the employer is ‘free to choose whether to provide a particular benefit to an employee’ it cannot be said to be an amount dealt with on the employee’s behalf.
  • Fringe benefit tax may be an amount dealt with at the employee’s direction, in a genuine salary sacrifice situation when an employee has forgone wages in return for a benefit. In this situation fringe benefit tax will be included in the employee’s earnings.