Employee benefit programs are designed to attract and retain top talent to your company. Having the right incentives will boost employee job satisfaction and retention. When you consider the cost of recruiting and training employees, you realize how much money a long-term productive employee saves you. Compared to an employee who might leave after a year, forcing you to start the process all over again. In addition to the obvious direct benefits, there are several tax advantages of employee benefit plans that are especially relevant to your fiscal year-end.
Here are just a few tax advantages of employee benefit plans that you should consider:
If you match employee contributions to a registered retirement savings plan (RRSP), you can claim this amount as a business expense. This is also the case when you establish group plans for tax-free savings accounts (TFSA’s) or registered education savings plans (RESP’s). Your employees also benefit by not paying income tax on their contributions.
Health and Dental Plans
If you offer private health or dental services within your group benefits plan, you can write off the premiums you pay for these services. In addition to traditional health plans, if you offer mental health services, counselling or even physical therapy; you can also claim these costs as a business expense. Your employees also aren’t required to report the benefit as income in their tax filing.
Gifts & Bonuses
If you give your employees a cash bonus, they have to pay income tax on that amount and you have to remit source deductions like you do on regular employee compensation. Gifts, such as golf clubs, phones or cameras allow you to write off the value of the gift (up to $500 per employee). If you are interested in profit sharing with your employees at the end of the year, DENT recommends a deferred profit sharing plan (DPSP). DPSP’s allow you (and your employees) to share profits in a way that is more tax-efficient for both parties. Please read our article on the Benefits of a Deferred Profit Sharing Plan for more details.
For more on the tax advantages of employee benefit plans, DPSP’s and group RRSP’s, contact the experts at DENT Benefits today!
The information in this material is derived from various sources. Material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made as to its accuracy or completeness. This article is not a substitute for tax advice from a licensed accountant. Please contact your accountant for tax advice before acting on any of the ideas above. Before acting on any of the above, please contact us for benefit, pension and insurance advice based on your corporate or personal circumstances.