If you’re trying to figure out how to honor your employees when they hit a milestone or other achievement, you don’t have to spend a fortune. Yes, financial perks, like bonuses, can be attractive to employees. But it’s often the thoughtful expressions of thanks that make the biggest impact. Australian businesses will need to be careful with employee recognition gifts, as a fringe benefits tax (FBT) may come into play. Ultimately, businesses just need to be mindful of how taxes impact their bottom line. Read on to discover eight tax-smart employee recognition ideas.
1. Reward Long-Serving Employees with Plaques
When you have an employee who’s logged a decade or two of employment with your company, it’s worth recognizing their loyalty and accomplishments. With a professional plaque, you can give an employee a tangible award they can display and keep indefinitely. And when you choose the right personalization options, you’ll give your employee a striking visual reminder of their hard work.
Best of all, you won’t necessarily face an FBT when purchasing a plaque. The Australian Tax Office (ATO) gives exemptions from FBT when an employee has made a service commitment of at least 15 years. An award of up to $1,000 can be tax-free.
2. Use Badges to Honor Employee Progress
You can help lift your employee with badges when they reach smaller but important milestones. Maybe an employee completes a professional development workshop or assists another employee with a big project.
Badges can be physical or digital. In either form, they’ll be a clear reminder for the recipient that they’re making steady progress toward goals or supporting company initiatives. And they can help you retain your best employees.
3. Reward Safety Achievements
When employees demonstrate safe practices in the workplace, their efforts shouldn’t go unnoticed. After all, when one employee helps create a safe workspace, they can inspire coworkers to do the same.
For gifts under $200, you won’t be subject to FBT. That’s because occupational health and safety awards are classified as exempt. Just be sure to retain all paperwork indicating the award’s cost and purpose to validate the exemption.
4. Save Money with the Minor Benefits Exemption
Not all awards require a ceremony or grand unveiling. Sometimes, a quick form of recognition is best for an employee. When someone pitches in on a project or helps mentor a new employee, a simple gift can be an appropriate token of appreciation.
When a small, occasional gift is under $300, it can qualify for a tax exemption. The gift can’t be something that is regularly repeated. Restaurant vouchers, gift cards, and concert passes are among the potentially qualifying options.
5. Give Training Access
Professional development opportunities can encourage employees to take on bigger challenges and help the business. Physical awards can be a great form of recognition, but access to training workshops and educational opportunities can be excellent, as well.
The gift of training may be exempt from FBT, but there are specific requirements to consider. Retraining opportunities for new positions typically receive an exemption. Work-related training, however, might not receive an exemption since it connects directly to an employee’s existing job.
6. Consider Making a Charitable Donation
Your employee might want their recognition to connect to a good cause. Consider letting your employee make a charitable donation to a local non-profit.
You’ll need to be careful with how the giving arrangement is structured, however, to receive an exemption. Consult with the ATO to understand whether a donation as a reward qualifies, and whether the recipient has deductible gift recipient (DGR) status. It’s always smart to seek input from tax professionals, too, to understand how gifts of any kind affect your bottom line.
7. Create Internal Awards
Creativity and awards can go hand in hand. In fact, internally created certificates can add a fun, unique spin to your company’s recognition process.
Teams can come up with awards relevant to your industry that you hand out at company banquets. In a SaaS company, for instance, nominating a “Pivotal Problem Solver” or “Customer Connector” could be fun ways to honor top performers.
8. Make an Achievement Space
With a digital or tangible board, you can create a centralized hub for recognition. Use an achievement board to post the latest sales team signing or recognize a strong review from a happy customer. When an employee hits ten years of service, use the board as a quick way to let everyone know the good news.
If you’re looking for inexpensive ways to build a positive recognition culture, an achievement board is easy. Everyone can contribute, too, to help share employee contributions.
Understand the Tax Implications of Awards
While tax concerns should not stop you from recognizing your employees, it is important to understand how they may affect your choices. Knowing what the ATO allows can help you choose rewards that are both meaningful and tax-smart employee recognition options.
With the right approach, you can build a consistent employee recognition strategy that rewards your team without unnecessarily increasing costs. By keeping tax considerations in mind, you can make tax-smart employee recognition part of a positive workplace culture while staying mindful of your budget.