Want to know which fringe benefits you can provide to your employees without incurring extra tax?
Fringe benefits are benefits provided to employees in addition to their regular salaries/paychecks. Fringe benefits are a common practice amongst all types of companies, so it’s expected for reputable companies to offer a good range of fringe benefits to their employees.
It may sound like fringe benefits are only good for employees, but offering them also directly benefits employers. Most businesses understand that fringe benefits help keep employees happy and productive, due to the fact that good fringe benefits will foster a positive work environment and employee-employer relationship.
Fringe benefits come in a variety of forms and can benefit both employers and employees in various ways. They range from practical benefits such as employee training to fun benefits such as trips and dinners.
Offering a wide range of fringe benefits can put a strain on your budget. This is why good fringe benefits are usually associated with large companies.
If you’re an SME, you will still want to provide good fringe benefits for your employees. Fringe benefits are necessary for retaining existing employees and attracting new talent. In Singapore’s highly competitive job market, offering good fringe benefits can make all the difference in helping your company stand out to prospective employees.
Not to worry. We’re here to help. It is still very much possible for an SME to provide a range of good fringe benefits. First of all, a loan from FS Bolt can provide you with a quick injection of funds to use for your employee benefits budget. Secondly, there are certain fringe benefits which Singaporean SMEs can offer their employees at a lower cost. This is because there are a range of fringe benefits which are exempt from tax in Singapore.
We’ve discussed the importance of employee benefits in a previous article.
This time around, we’ve taken a more detailed look at particular fringe benefits that are exempt from tax according to the Inland Revenue Authority of Singapore (IRAS).
1.) Family-day Events
The goal of family-day events are to foster good relationships among staff and between employees and employers.
Socializing at the workplace is vital, but so is socializing outside of it. Organizing a family-day event can provide a casual, relaxed environment for employees and their families to socialize amongst each other.
Getting to know your employees at such an event will create a humanizing element to your company and management. This will go a long way in creating a more positive work environment.
Family-day events aren’t high on the list of employees most demanded fringe benefits. But they are still worth considering due to the positive outcomes they can provide.
2.) Corporate dinner
Similar to family-day events, a corporate dinner provides an avenue for employees and management to socialize outside of the workplace.
A family-day is usually a casual affair while a corporate dinner can be more costly to organize. However, executing it well can improve your company’s standing among your employees to a degree that a family day cannot.
It’s worth the investment to hold an annual corporate dinner that can really impress employees, clients and shareholders. The employees will get to enjoy the benefit of a nice dinner and night out. While you enjoy the benefits of happier employees and a better reputation among clients and shareholders.
The positive effects of a corporate dinner can extend for days or even years after the event. Especially if you do it right. IRAS even specifies that door gifts and lucky draw prizes are exempt from tax. This is another good opportunity to make staff members, clients and shareholders happy.
3.) Corporate Gym Membership
Fitness and health becomes a bigger trend with each passing year. The Singapore government in particular is pushing for healthier living among citizens with various campaigns such as the healthier choice symbol to promote awareness of healthy foods among consumers and the healthier dining grant to encourage restaurants, hawkers and F&B providers to provide healthier options for consumers.
The IRAS states that the provision of free or subsidized recreational facilities by employers if exempt from tax. In this day and age, more and more people go to the gym as an essential part of their regular routine. This makes a corporate gym membership a very attractive fringe benefit for many employees. Furthermore, offering a corporate membership can encourage more of your employees to utilize the facilities and live a healthier lifestyle. It’s generally understood that good fitness and health are a vital part of a good work-life balance. Therefore, the positive health benefits for your employees can often extend to increased productivity for your company.
Seek out a gym that has a good corporate membership system in place. For example, Fitness First offers different corporate wellness packages. You may want to make a full provision for a corporate membership or subsidize it partially. In either case, find a gym that provides an invoice and system so you can easily keep track of your company’s spending. This will also prove useful when it comes to declaring your spending for tax purposes.
4.) Free/subsidized food and drinks
Everyone needs to eat! Free food definitely stands out as one of the simplest yet most effective fringe benefits that a company can provide for its employees.
No matter how many employees you have, or how long they’ve been working for you, most employees would appreciate the provision of free food at the office.
There are various corporate catering solutions in Singapore available for you to try. For example, Caterspot provides companies with corporate catering accounts. These corporate catering accounts make it easy for you to order food for your employees and keep track of the spending. Caterspot can even craft recurring meal plans specific to the needs of your staff. The corporate account also provides reports on orders placed by staff, corporate billing, the ability to add staff to the corporate account, and invoices sent to you finance department.
This makes it even easier to set up cost effective corporate catering for your company. Give free food for your employees a try and see their morale jump!
According to the IRAS, the following items fall under the category of “benefits given to encourage upgrading of skills and skill building”:
- a) Subsidies for course fees
- b) Training fees for staff development
- c) Scholarships awards
- d) Examination fees
All of these benefits can be provided free of tax. You just need to make sure that the benefits are available to all staff. Most SMEs tend to provide specialised services or products. So SMEs often need to provide some form of training to their employees in that regard.
Having well-trained employees will benefit your company. Providing free training for your employees is a fringe benefit that isn’t taxable, so paying for your employee’s training and examination is a no-brainer.
6.) Childcare Subsidy
Another fringe benefit that isn’t usually considered by employers and employees, but one that can make a big difference in your employee’s outlook.
This benefit can make an enormous difference to certain employees. Having to take care of a child can have a serious long-term impact on an employee’s productivity. At the same time, it’s unwise to discourage employees from looking after their children.
Providing a child care subsidy can help alleviate the pressures that some employees face with having to take care of their young children. With the childcare subsidy, an employee can trust a licensed childcare centre to look after their child for the day. This will give the employee the peace of mind to go about their work as usual.
You could even go the extra mile by setting up a workplace childcare centre. It sounds like a big financial undertaking, but you can get help. Check out the Singapore Government’s Early Childhood Development Agency scheme to help companies set up workplace childcare centres. This scheme is called the Enhanced Workplace Childcare Centre Scheme and provides grants for employers/building owners who are committed to setting up good quality and affordable child care services for their employees.
All of the fringe benefits that we’ve discussed can bring positive effects to your workplace. These include increased employee happiness, increased productivity, and better relationships between employees and management.
The Singaporean Government definitely acknowledges the fact that fringe benefits are vital to sustaining corporate success. The fact that the aforementioned fringe benefits are free from tax goes a long way in helping SMEs provide them to their employees.
Even with the lack of taxation on fringe benefits, it can still be difficult for SMEs to provide a good range of fringe benefits to their employees.
If you need a cash flow injection to help boost your fringe benefits budget, consider FS Bolt.
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