Sorry for the simple question but I want to get advice on the most tax smart way of paying an employee a once off bonus. They only do casual work but have recently have made a huge positive impact on the business so I want to reward them but do not want them to get taxed a fortune.
Also be careful with the Covid stimulus payments, if this is a one-off bonus and ultimately increases your stimulus payout you might get a "please explain" letter from the ATO asking why you deemed it appropriate to pay a bonus at this time? (assuming they are employed by you and you submit PAYGW for them that is).
Keeping their employment is likely the best bonus a person could get in many industries. A a nice thanks with a gift under $300 as a one off (exempt as a fringe benefit). There may be ways to structure this to their advantage (and yours) and the stimuus incentives may well apply if its truly arms length. This is a time where tax advice on the end of a phone and a quick chat is great value. Some ideas: - Taxed bonus... This could enhance stimulus cashflow boost entitlements so its win win. - Changed conditions ie PT not casual - Increased hours - Increased pay rate - One off addition to super - An exempt fringe benefit (may be hard for a casual)
could you offer them an exempt fringe benefit ? paying for their taxi travel for a single trip beginning or ending at the employee’s place of work are they an employee ?
Gift vouchers (plural) may be subject to FBT. A minor or infrequent gift voucher is exempt. A regular one is not. There is a second limb to the minor test which is often overlooked which can group One trap is the $300 minor benefit rule. The value of the minor benefit (eg gift card) must be LESS than $300. Its common for people to think it has a $300 limit. Read up on the five critera for minor benefits as some under $300 may be caught when accumuluated or given on a regular systematic basis in lieu of remuneration. eg Paul P/L given all employees a hamper worth $250 and agift card worth $200 and a bottle of alcohol worth $75 three times a year. These may accumuluate and not be minor and may be too frequent or regular. Hence the employer could have a expectation of maintaining records for each employee. The ATO use an example of employees given flowers on a birthday as an example of what may be acceptable vs more regularly which would not be.
Gift vouchers (plural) may be subject to FBT. A minor or infrequent gift voucher is exempt. A regular one is not. There is a second limb to the minor test which is often overlooked which can group One trap is the $300 minor benefit rule. The value of the minor benefit (eg gift card) must be LESS than $300. Its common for people to think it has a $300 limit. Read up on the five critera for minor benefits as some under $300 may be caught when accumuluated or given on a regular systematic basis in lieu of remuneration. eg Paul P/L given all employees a hamper worth $250 and agift card worth $200 and a bottle of alcohol worth $75 three times a year. These may accumuluate and not be minor and may be too frequent or regular. Hence the employer could have a expectation of maintaining records for each employee. The ATO use an example of employees given flowers on a birthday as an example of what may be acceptable vs more regularly which would not be.
