Does your Maine business offer health insurance and group-term life insurance, as well as an array of fringe benefits to its employees? While there are certain requirements, these fringe benefits are generally deductible by the company and tax-free to the employees as long as they are not discriminatory in nature. (If your company decides to reward a select group, such as limiting benefits to only the corporate officers, the benefits are generally taxable to the recipients.)
There is one key exception, however. Suppose you’re a fitness devotee who works out on a regular basis. You can have the company set up a gym at the office for all employees, or maybe just for the exclusive use of the top brass. Because the usual nondiscrimination rules do not apply to an athletic facility located on an employer’s premises, there are no tax repercussions.
What Is an “Athletic Facility?”
A gymnasium, swimming pool, tennis court or golf course is considered an “athletic facility” for this purpose. The athletic facility must generally be located on premises the employer owns or leases.
For employer-paid health-club or country club memberships that are off-site, the tax exclusion does not extend. In other words, the payment of club dues to an outside facility or health club is a taxable fringe benefit.
To make this tax perk even better, you can also allow spouses and dependent children to use the facilities as well.
Can your company deduct the cost of setting up and operating the fitness facility? Yes, but in order to take the write-offs, it must be made available to employees who are not owners or members of the highly-compensated top echelon of the firm.
The use of the onsite athletic facility is tax free as a “de minimis” fringe benefit even if it is only allowed for certain staff members. But if your company wants to deduct the costs involved, the facility cannot only be offered to highly paid executives.
The Benefits of Getting Your Staff Moving
Paid exercise breaks, on-site athletic facilities, nutrition counseling and stress management programs offer benefits to both staff and employers. It’s no secret that a healthy lifestyle reduces stress and improves energy levels and productivity. That message hit home in the workplace when companies began offering fitness programs to employees.