Wellness Programmes at Work Tax Free

Employees whose employers have introduced wellness and fitness training classes within the workplace do not have to pay fringe benefit tax to keep fit.

This is according to Ron Warren, tax expert and Executive Chairman of payroll software company NuQ, who says that more and more companies are introducing wellness centres and programmes into their businesses as a benefit for their employees across the wellness spectrums including gym training etc.

He explains that companies can pay gym instructors and wellness consultants to conduct training for employees in the workplace and put this through their businesses as an expense and it does not have to reflect as a taxable employee fringe benefit.

“There is provision in the Fourth Schedule regarding the taxation of free or cheap services as a fringe benefit,” he says.

He adds that this provides that the fringe benefit will have no monetary value for any service provided by an employer to employees –
- for the better performance of their duties at their place of work; or
- as a benefit to be enjoyed by them at their place of work or
- for recreational purposes at their place of work; or
- for recreational purposes at a place of recreation for the use of employees in general.

“Accordingly, if the gym trainers or wellness consultants provide their services at the employees’ place of work, they will have no value for fringe benefit tax purposes,” says Warren. “However, if they are provided away from the place of work, their cost to the employer will be a taxable fringe benefit.”

He explains that a fringe benefit is a benefit that an employees receives as a part of his employment. It is the cost of the benefit to the employer in most cases, but in other cases (like a company car) the Fourth Schedule to the Income Tax Act sets out rules as to how the taxable value of the benefit is to be arrived at.

“Once the value of the benefit has been arrived at, that is added to the taxable renumeration received by the employee and that total is subjected to tax,” he adds. “In other words, a taxable fringe benefit is just remuneration that is received in a non-cash form.”