Treat your employees, lower your tax. Source: Unsplash/Simona Sergi

Adam Carswell

Win-win: Why employee bonuses are a useful EOFY tool

Adam Carswell
3 minute Read

Paying a bonus to one or more of your employees might seem a bit of a stretch right now given the extraordinary circumstances but if you consider the tax benefits to your business, and the likely boost to the deserving recipient’s morale, it could make sense.

What is, and isn't a bonus?

If you ask the ATO, a bonus refers to “payments usually made to an employee in recognition of performance or services” that “may not be related to a particular period of work”.

There’s other one-off payment types, including relocation allowances and gifts, that while not connected to performing particular tasks, are treated similarly by the ATO in terms of allowable deductions, and tax implications for the employee (see below).

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