Elimination of the cap on the payment of employers' contributions

Executive Decree “by virtue of necessity and urgency” No 491/2004 and AFIP General Resolution No 1750/2004 gradually raised the maximum cap on remuneration subject to employers' contributions with the intention of finally eliminating the cap as of October 1, 2005.

Moreover, it was established that in relation to the National Employee Health Insurance System, the National Health Insurance System and the Workers' Compensation Law, the cap for employers' contributions will continue to be A$ 4,800.

Personal contributions by workers will maintain the limit of A$ 4,800.

Elimination of the cap on employers' contributions will surely imply an increase in the cost of labor for companies in relation to their senior personnel.

An alternative to moderate the impact of social security tax on the fiscal year of 2005 would consist in payment in advance of elimination of the caps, of the yearly bonuses generally payable to the Management Staff at the end of the year, in those cases in which the bonus, when added to salaries and wages, exceeds the amount of A$ 10,000.

In the event of partial proportional settlement of the yearly bonus and settlements paid in advance for vacation time, the taxable base to be considered in the calculation of contributions cannot be greater than the amount resulting from a daily weighted average of the cap in effect for the monthly remuneration, times the number of days to be paid for these items.