You may wish to put more money in your employees' pockets without it costing you any more.
This can be done by structuring your employees' remuneration packages so that they consist of cash and non-cash benefits.
If you decide that you are prepared to pay, for example, R5 000 a month to have an employee on your payroll, you may provide that employee with a mixture of cash and benefits that cost you R5 000.
A couple of words of warning:
* If you decide to go the remuneration package structuring route, you must ensure that the package is structured before the money accrues to the employee in the form of cash, since once it has accrued as cash it is taxable as cash. So, for example you may wish to start considering structuring your employees' March packages now. But you can't "restructure" January's packages, since your employees have already earned their remuneration in the form of taxable cash; and
* It is vital that remuneration package structuring is implemented properly. Incorrect implementation may result in employees being taxed on amounts that you thought were being provided as benefits subject to the fringe benefits rules. Consider asking your tax consultant to ensure that you have implemented benefits properly.
So what can you do?
The types of benefits you might consider looking at include:
* Providing employees who might need to entertainwith an entertainment allowance of up to R2 500 a year. This will entitle them to deduct club subscriptions and other business-related entertainment from the allowance in their tax return;
* Providing employees with either a travel allowance so that they may deduct business-related travel costs from their taxable income, or a company car so they pay on the fringe benefit value of the car.
* Ensuring that medical aid and provident funds are non-contributory, and that the employee does not pay the contributions. It is important to be aware in this instance, if the contributions are taken into account when you determine the employee's cost of employment, that the contributions may be based on the basic cash salary, which may result in the contribution being less than the employee had thought. The rules of the fund are relevant;
* Providing employees with residential accommodation;
* Making a recreational facility available to your employees;
* Providing employees with occasional services of up to R500 a year, for example paying for their tax returns to be completed; and
* Ensuring that, if you require employees to travel away from home overnight for business purposes, they are given a subsistence allowance.
These are just a few of the more popular benefits that can be provided, and your tax consultant can explain how they are treated for tax purposes. Ultimately, they will result in more money in the employee's pocket.
Another point to remember, though, is that laws change regularly, and the tax treatment of benefits may change, so you should always monitor the benefits you provide. The 1998 Budget, for example, might change the way some of the benefits set out above may be treated and you will need to ensure that the employees' tax is being done correctly.