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Offering employees non-cash benefits

Most small business owners would love to be able to offer their more valuable employees a pay rise.

Increasing an employee’s pay is likely to reduce staff turnover, increase job satisfaction and boost productivity by raising motivation and commitment.

Unfortunately, most small business owners are simply not in a position to offer their staff a larger pay packet. However, there are a number of non-cash benefits that you may care to consider as an alternative course of action for recognising and rewarding good work.

These non-cash benefits may not have a dollar value. For example, allowing employees to work from home once a week or rearranging their working hours to better suit other commitments. Non-cash benefits may also have an identifiable dollar value, and in this case employers need to be aware of fringe benefits tax (FBT) before they decide to offer a non-cash benefit.

Non-cash benefits that attract FBT include, but are not limited to, personal use of a company car, cheap or interest-free loans, and entertainment in the form of food and drinks. Typically, where an employee is provided with a fringe benefit, the cost of the benefit is deducted from their gross (before tax) pay and the employer must pay FBT on this amount.

Most employers will pass this tax cost onto the employee. In most cases, FBT will not apply to benefits that are provided to independent contractors.

There are also some types of benefits that are not subject to FBT or receive an FBT concession, including some types of work-related items, living away from home allowances, and benefits that are classified as ‘minor benefits’ (less than $300).

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Transition to retirement

November 25, 2020

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.