Short answer
A complete compensation package is assessed through annual cash flow, savings in your name, variable compensation and benefits. Employer cost is a separate information layer, not net income.
Four layers of value
The largest annual number is not necessarily the most useful decision number.
Annual net cash
Net base salary and bonus based on payment timing and estimated tax. This is the layer closest to bank-account cash flow.
Long-term savings
Employee and employer pension, severance and education-fund deposits are shown separately from cash.
Equity and benefits
RSUs, options, meals and car benefits depend on conditions, tax and timing. Neto shows an estimate or range, not a guaranteed value.
Employer cost
Gross pay plus employer-funded components. Useful for understanding the package, but not equal to employee annual income.
How to treat bonus and equity
Variable compensation belongs in a scenario with visible conditions, not in a guaranteed number.
Annual bonus
Record the gross target, frequency and eligibility conditions. A one-time payment may be withheld differently in one payslip but reconciles on an annual basis.
RSUs
Separate total grant value from value vesting this year. Share price and tax route are uncertain, so use a scenario rather than a forecast.
Benefits
Show useful employee value separately from taxable value. Employer cost is not always the employee's full personal value.
Before drawing a conclusion
Practical checklist
- Start with annual net cash, not employer cost.
- Separate total equity grant from vesting in the year being assessed.
- Label guaranteed, performance-dependent and market-dependent components.
- Do not describe a tax estimate as a definitive Section 102 outcome.
Next step
Move from explanation to your scenario
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Primary sources
What this guide is based on
The official source takes precedence over a general explanation. Review dates and the tax-year version remain visible.
Frequently asked questions
Is Total Compensation annual income?
Not necessarily. It can include savings, benefits, equity and employer costs that do not reach the bank account in that year.
How should RSUs enter the calculation?
Use the value vesting in the assessed period with an explicit price and tax scenario. A multi-year grant is not all first-year income.