As the job market has become more competitive employers have, by need, become smarter around attainment and retention, says Baker Tilly Staples Rodway Taranaki People and Culture associate Trish Baylis.

However, many still take a conservative approach rather than risk attracting unintended liabilities due to grey areas around tax and how employee benefits are treated, especially if they don’t have easy access to the right advice.

Below, we consider a range of options and things to consider.

The true cost of FBT

When providing employee perks and benefits that attract Fringe Benefit Tax (FBT), it’s important to understand your liability and the true cost once FBT is added, bearing in mind that in the top rate in the current tax year is 63.93%. The reason it is so high is that the company providing the benefit gets a tax deduction for FBT paid, so providing a benefit at the top FBT rate has the same after-tax cost as paying the same employee cash.

“The moment you provide benefits in kind, these potentially attract tax in the form of FBT. You do need advice around how these things are treated because it can cost more than you intended, especially when it comes to motor vehicles,” says Trish.

One size does not fit all

A number of factors influence what benefits staff prefer including age and personal circumstances. If you’re a large employer with the scope to set up and maintain an employee benefits programme, you could offer a suite of benefits to choose from – an à la carte menu, if you like.

However, if you have a smaller business with fewer resources, the important thing is to find out what matters to your staff then, where viable, offer options in line with that.

“Your main goal is to keep your employees engaged and have them value the deal that they get from you versus someone down the road that might pay them an extra $50 in the hand – and ensure they are aware of the true personal benefit of those things to them,” says Trish.

What’s your main employee demographic?

Generally speaking, those nearing retirement are likely to value security, preferring the likes of superannuation schemes, life insurance and medical insurance – with the latter meaning staff can afford to be proactive in taking care of their health and wellbeing.

Conversely, later generations might be drawn to a having a more defined pathway of learning and development (which you won’t be taxed on if it’s aligned with your business), the latest tech devices or extra cash to help them get ahead.

Thinking outside the square

Farmers are onto a sure winner for meat-loving employees – some offer a beast (or part of it) as part of their contracts. But what can your business offer and can you think of any creative offerings that set your workplace apart? For example, you might provide a work tool or product that staff get to buy at an attractive rate at the end of a set period, which is also an incentive to look after it, says Trish.

Look at capitalising on what makes you different and packaging that in an enjoyable way. Outside of tangible pay and benefits, some of the biggest factors in employee retention are flexibility and workplace connection.

“It's about finding things people can engage in beyond what they do professionally every day. What was important to me when I came into this role was knowing that I was going be happy coming to work and that I’d enjoy what I do,” says Trish.

List of perks and benefits – some options

These are just a few ideas that will help you build a thriving workforce of engaged and happy employees, but really you’re only limited by your own creativity and the rules – and our human resources, business advisory and taxation specialists are here to help!