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Relocation Package – Guidance for Employers and Employees

  • 03 Mar 2021
  • Kerry McMahon

Statistics taken as of March 2021 – Australia

Employers and Employees often ask me for advice around relocations packages and what to expect. 

It is a fact that relocation packages vary greatly from company to company, there are however industry averages and statistics that I was able to pull on, I also had a look into the tax aspects of relocation packages.

An average relocation package costs $21,033.  While smaller companies, in general, provide less valuable packages – averaging $10,971 – there are exceptions. Some small companies offer highly competitive packages

A core or typical job relocation package usually covers the costs of moving and storing furnishings and other household goods, along with help selling an existing home and costs incurred house hunting, temporary housing if necessary and all travel costs by the employee and family to the new location

Standard relocations include at least 30 days of temporary housing for transferees. Transportation, including auto moving, to the final destination. Average relocation packages include reimbursement for transporting your transferee and his/her family to the new location.

A lump sum relocation package is an allowance that a company gives to an employee to help them relocate for a new job opportunity. Lump sum packages are designed to help employees get settled and back to work faster because they have more flexibility to move quickly into their new city and role

If the company was going to cover the entire relocation, they'd offer anywhere from $10,000 - $14,999. So if your company is going to offer you a lump sum, you should expect to see somewhere within that range.

Tax Implications - Employee

When you give a relocating employee any sort of relocation benefit—whether it's in the form of a signing bonus, reimbursement for moving expenses, or even when you book a flight or pay for a service on behalf of your employee—that money and/or those services are considered taxable income.

Tax Implications – Employer

Under the Fringe Benefits Tax Act there is an exemption from fringe benefits tax for an employer who either pays or reimburses an employee's relocation costs. In addition, the employer gets a tax deduction for the relocation costs paid and can claim the GST input tax credits back on the payment as well.

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