Eight types of fringe benefits and how you can award them to your employees
1. Rewarding employees for great service
Tom is jetting off on an unforgettable long weekend away and you're paying. Instead of paying an incentive bonus, you decide to send Tom, the star salesperson of the year, away on an all expenses-paid long weekend to Cape Town at the end of the month.
2. Goods/services given to relatives of employees
Mr Henry achieves his annual sales target in the first six months of the year. To do this, he had to travel and be away from home a lot. To thank his family for their sacrifices - tolerating him being away from his home a lot - the company gives his wife a new car as a gift.
3. Purchase of an asset at less than actual value
SK Elm & Co, Attorneys practice, redecorates their offices. As part of this redecoration, they purchase new office furniture and allow the staff to purchase the old furniture at 90% less than market value.
4. Right to use an asset
Polycom Printers have a caravan that they bought a few years back for team-building retreats. In June, they let John and his family use it to go on holiday for ten days.
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5. Free meals and refreshments
The Perfect Insurance Company believes in taking care of its staff, so it provides a free three-course lunch every day to staff in a special dining room.
6. Free or cheap services
Wonder Skincare are experts at beauty products. Their staff knows this very well because Wonder Skincare gives their staff free facials and cosmetics.
7. Medical costs incurred by the employer
The Gold Mining Co has a company policy whereby they provide free medical tests and free antiretrovirals to their staff.
8. Company cars
The Gorgeous Cosmetic Co has seven company cars to use. It allocates company cars to all its sales reps, the financial director (FD) and the director.
Fringe benefits are great perks to award your employees. But they can be costly for, if you don't declare output tax
on them. You can avoid this because you now know how to identify them. Remeber to include these fringe benefits in your next Vat