The supply of non-cash remuneration: Employer responses

The supply of non-cash remuneration: Employer responses Michael Lyons and Will Ward University of Western Sydney This paper compares and contrasts the federal Coalition government’s system of taxing non-cash remuneration with its industrial relations system based on agreement making between employers and employees. It was anticipated that synergies between the two policies would be detected because of the government’s assertions to having simplifi ed both systems. Analysis of over 10,000 enterprise agreements revealed that fl exible remuneration clauses are rare. However, employee level data shows that the supply of non-cash remuneration is extensive. Moreover, analysis of a survey of businesses located in Sydney found the compliance costs of processing employee remuneration had increased. While the employer respondents expressed a readiness to supply non-cash remuneration to their staff, the taxation of such arrangements was found to be a considerable impediment. The results suggest that if fl exible remuneration is supplied, it is probably done informally to avoid taxation compliance costs, and this accounts for the greater incidents of employer provided fringe benefi ts found with the employee level data. We argue, therefore, that the confl ict between the government’s two policies denies employers and employees the capacity to achieve their industrial relations aspirations. Consequently, the government’s claim of having simplifi ed the industrial relations system must be questioned because of this additional form of regulation.