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As we approach the Christmas period, it is important to be aware of additional employee costs that can arise so that they can be budgeted for as best as possible. With staff shortages having become prevalent in all industries at present, it is going to be particularly important to ensure that remuneration packages are also competitive with industry, so that you are not left short-staffed. In this article, we have summarised some of the more common issues that arise for retail businesses during the Christmas season.
Most retail businesses will need Christmas casuals, because of busier than normal trading over Christmas, as well as permanent staff booking in annual leave. Where possible:
It is important to be realistic about what is fair and reasonable while also considering what your business can afford when it comes to bonuses. Remember:
The provision of gifts to employees are generally considered fringe benefits that will be subject to tax. However:
One common way to make an employee remuneration package more competitive is by providing staff discounts, which generally gives rise to a fringe benefit.
However, the way in which the provision of such benefits is structured, can have a significant impact on the income tax and FBT payable by employees and employers. As such, it is recommended that up-to-date tax advice be obtained in relation to this.
If planned carefully, a great result can be obtained for both employers and employees.
Christmas parties constitute entertainment benefits and may be subject to FBT unless an exemption applies, such as:
Minor benefits exemption:
Where an FBT exemption applies, the cost of the benefits will not be deductible to the employer. However, the tax saving on FBT will generally outweigh the loss of the tax deduction.
Don’t let the Christmas spirit and celebrations create a financial hangover for the new year. Plan ahead as much as possible.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to your circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
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