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).
Why do it now?
Even though it can be tempting to turn a blind eye to the bare figures of your business, ‘as long as the doors are still open’, the lead up to the EOFY is a great opportunity to have an honest look at your expected revenue and profit (or lack of) over the past 12 turbulent months.
EOFY sale now on
