Here's how to use your employees' tax-free fringe benefits to your company's advantage
For your employees to do their jobs, they may need a bit of help. This is where fringe benefits come in. You give your employees a little something extra to help them do their jobs.
A lot of these employee benefits result in fringe benefit tax. That means you have to fuss with their tax and withhold the right amount each month.
But what you may not know is there are plenty of tax-free fringe benefits you can give your employees.
Here's how you can use these to your advantage...
Tax-free fringe benefits can be a great advantage if you use them right
Your employees will benefit from tax-free benefits because they don't have to pay anything extra on them. But you can benefit from them too.
You can make your employees more productive without making them worry about paying extra tax.
An example of this is paying for your employee's studies. This is tax-free as long as you write up a contract that states your employee must pay you back if he doesn't complete his studies.
This tax-free benefit helps you grow your company's knowledge base without forcing your employees to pay anything for it.
Keeping your benefits tax-free also helps you save time you would have had to spend working out their tax.
Here's what you need to know about fringe benefits, to ensure you only use the tax-free ones.
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Here's what you need to know about giving tax-free fringe benefits
The rule of thumb for fringe benefits is, if the benefit is purely for business then it's tax-free. There are a few exceptions to this rule, such as service awards and study fees that you can check out in the Practical Tax Loose Leaf Services
If your employee uses the benefit for his own personal gain, on the other hand, then it triggers fringe benefit tax.
So stick to this rule and you and your employees can reap all the benefits of tax-free fringe benefits.
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