WHAT IS FRINGE BENEFIT?<br />A Fringe benefit is a benefit provided to you or an associate (for example, your spouse or children) through your employment. The employee may be a current, former or future employee.<br />
Employee benefits can also called as fringe benefits, perquisites, perqs or perks or benefits in kind) are various non-wage compensations provided to employees in addition to their normal wages or salaries. where an employee exchanges (cash) wages for some other form of benefit, this is generally referred to as a ‘salary sacrifice’ arrangement. in most countries, most kinds of employee benefits are taxable to at least some degree. e.g housing, health, dental, retirement benefits etc.<br />
The term benefit includes any right (including any property right), privilege, service or facility. <br />
BENEFITS CAN BE PROVIDED BY:-<br /><ul><li> Your employer
Home cleaning services</li></li></ul><li>WHAT ARE NOT CONSIDERED TO BE FRINGE BENEFITS?<br /><ul><li> A mobile phone or car phone used mainly for your employment.
Protective clothing required for your employment.
A briefcase, calculator, a tool of trade, PDA, laptop, etc.</li></li></ul><li>FRINGE BENEFITS TAX<br />In a number of countries (e.g., Australia, New Zealand, and India) the ‘fringe benefits’ are subject to the Fringe Benefits Tax (FBT), which applies to most, although not all, fringe benefits. <br />
ADVANTAGES OF EMPLOYEE BENEFITS<br />EMPLOYER ADVANTAGES<br /><ul><li>Helps attracts and retain better qualified employees.
Provides high risk coverage at low costs easing the company’s financial burden.
Improves efficiency and productivity as employees are assured of security for themselves and their families.
Premiums are tax deductible as corporation expense, which means savings with quality coverage.</li></li></ul><li>EMPLOYEE ADVANTAGES<br /><ul><li> Peace of mind which leads to better productivity.
Employees with personal life insurance enjoy additional protection.
Boost staff morale and pride in company.</li></li></ul><li>DISADVANTAGES<br />In UK these benefits are often taxed at the individual normal tax rate, which can prove expensive if there is no financial advantage to the individual from the benefit.<br />
IN INDIA ACCORDING TO FINANCE BILL (BUDGET 2005-06)<br />As per the Finance Bill, fringe benefits shall be deemed to have been provided if the employer has incurred any expense or made any payment for the purposed of:<br />1.Entertainment<br />2.Festival celebrations<br />3.Gifts<br />4.Maintenance of guest house<br />5.Provision for hospitality<br />6.Employee welfare<br />7.Use of telephone<br />8.Scholarship to the children of the employees<br />9.Repair, running and maintenance of motor cars and aircraft<br />
10. Consumption of fuel other than industrial fuel11. Conference13. Use of health club, sports, and similar facilities14. Conveyance, tour and travel, including foreign travel expenses15. Hotel boarding and lodging.<br />
WHO PAYS FRINGE BENEFIT TAX?<br /> Under the provision, fringe benefit tax is payable by an employer who is either an individual or a Hindu undivided family engaged in a business or profession; a company; a firm; an association of persons or a body of individuals; a local authority, a sole trader, or an artificial juridical person.<br />
BENEFITS COVERED BY UNITED STATES<br /> They include relocation assistance, medical, prescription, vision and dental plans, health and dependent care flexible spending accounts, retirement benefits plans and possible other miscellaneous employee discounts (e.g. movies and theme park tickets wellness programs, discounted shopping, hotels and resorts and legal assistance plans. <br />
BENEFITS COVERED IN UK<br /> They categorized it under three terms:<br /><ul><li> Flexible benefits (flex) and Flexible benefits packages
Core benefits</li></li></ul><li>LETS SEE WHAT ARE THEY FOLLOWING<br />Flexible Benefits, usually called a “Flex Scheme”, is where employees are allowed to choose how a proportion of their remuneration is paid. This is done normally by allowing employees to sacrifice part of their pre-tax pay in exchange for a car, additional holiday, a shorter working week , etc<br />A number of external consultancies exist that enable organizations to manage Flex packages and they centre around the provision of an Intranet or Extranet website where employees can view their current flexible benefit status and make changes to their package.<br />
VoluntaryBenefits<br />It is the name given to a collection of benefits that employees choose to opt-in for and pay for personally. These a specially government backed schemes like Bike2Work and Childcare Vouchers like Sodexho and also specially arranged discount schemes for employees .<br />Core Benefits is the term given to benefits which all staff enjoy, such as holiday, sick pay and sometimes flexible hours.<br />
THANK YOU<br /> BY THIRUMAGAL PRIYA .S <br />Vels Institute of Management Studies<br />