Employee Incentive Schemes
Employee incentive schemes are a common strategy for retaining staff and can be effective in encouraging loyalty as well as improving motivation and productivity.
It can be difficult to decide on the most suitable incentive scheme that will drive the best performance and help the business to achieve its goals.
Azure Group has the knowledge and expertise to help you to set up and administer an employee incentive scheme that will safeguard the company’s financial interests, reflect its objectives, boost performance and also ensure the business is not exposed to unnecessary liabilities.
Every incentive scheme has various taxation and compliance implications. In essence the Australian Tax Office (ATO) outlines that an employer cannot give an incentive to an employee without it being considered remuneration to the employee in some manner.
There are numerous types of incentive schemes that a business can implement. Some popular ones are:
Incentives and fringe Benefits Tax (FBT)
The tax mainly associated with employee incentive schemes is fringe benefits tax (FBT) and it represents a cost to the employer. It can also be complex in how it is applied to different incentives, staff rewards and remunerations.
FBT impacts non-cash incentives, such as gifts, company cars, reimbursements, accommodations and salary sacrifice schemes. There are work-related items however that are FBT exempt, for instance items considered to be tools of the trade.
Azure Group can assist with:
- Deciding on the best incentive scheme for your business, including undertaking cost and tax liability analysis
- Implementation of incentive schemes
- Managing taxation and compliance, including FBT, implications and responsibilities
- Monitoring the results and outcomes of incentive schemes
- Advising on and structuring complex equity-based / employee share schemes.
To learn more about the best employee incentive schemes for your business, how to implement them and the implications of FBT, contact us