Rewarding your staff as well as your bottom line
Congratulations, you have great people who go above and beyond!
And you want to keep them motivated and happy by acknowledging their achievements and milestones. But what's the best way to do this, not just for your staff but also for your business?
There are a few tax implications to consider when deciding on what rewards to give to your staff.
Firstly, you should avoid giving "entertainment gifts". While throwing a party or giving tickets to a movie or a sporting event might seem good, these gifts are bound by some tax limitations.
If the cost of an entertainment gift is over $300 then your business can claim it as a tax deduction or GST credit, however it will be subject to FBT (Fringe Benefit Tax) which is currently 49%. On the other hand, entertainment gifts of less than $300 are exempt from FBT (Fringe Benefit Tax) but your business can't claim it as a tax deduction or GST credit.
It's actually better to give "non-entertainment gifts" such as a GiftPay gift card. The reason being that these types of gifts can be classified as a minor benefit by the ATO.
To qualify as a minor benefit a gift needs to be
- Non-entertainment;
- Under $300 in value;
- Infrequent and ad-hoc;
- Not considered a reward for regular service.
Minor benefits are the best bang for your buck as they are fully tax deductible and exempt from FBT.
GiftPay eGifts are also good value for employees, as they don't incur any personal income tax, unlike bonuses and salary increases.
Lastly, eGift Cards are great as they address not only the financial value of a reward but also the intrinsic emotional value. Getting a monetary reward is great, but acknowledgement from peers can be just as important. So gift cards are a great way to shine a light on all the good work that your employees are doing!
In conclusion, keep your staff and accountant happy by using a "minor benefit" eGift Card from GiftPay.
