Tax and Superannuation Obligations For Employees Who Receive Covid 19 Vaccination Incentives and Rewards

Superannuation Obligations

There is no denying Covid 19 has hugely changed the world. As businesses navigate their new normal, many employers have chosen to give incentives or rewards to employees vaccinated against Covid 19.

There are different forms of incentives and rewards employees may receive and depending on how they are issued, they may have tax and superannuation implications.

  • Employees who receive a cash payment for having their Covid-19 vaccination
  • Employees who receive non-cash benefits for having their Covid-19 vaccination
  • Employees who receive paid leave relating to having their Covid-19 vaccination

Employees who receive a cash payment for having their Covid-19 vaccination

If the incentive or reward given to employees is a cash payment, employers must report the payment via Single Touch Payroll (STP) as part of the employee’s salary or wages and tax will need to be withheld from the cash payment under pay as you go (PAYG) withholding. In the instance a cash payment was made, but tax was not withheld, it is important to contact the Australian Taxation Office (ATO).

The cash payment also needs to be included in the employee’s ordinary time earnings for the purpose of super contributions. Employers must ensure the super contribution is made no later than 28 days after the end of the quarter the cash payment was made. Not doing so can result in the employer being responsible for the super guarantee charge.

Employees who receive non-cash benefits for having their Covid-19 vaccination

Non-cash benefits employers can incentive or reward employees with can include a good, a service, vouchers/gift cards or points in a reward scheme. It is important to speak to the ATO or your accountant about how the Fringe Benefits Tax (FBT) is treated, for both employers and employees, on non-cash benefits as exemptions or reductions may apply.

Employees who receive paid leave relating to having their Covid-19 vaccination

Employers may choose to incentive or reward employees by giving paid leave to receive their Covid-19 vaccination. Employers may also choose to give employees paid leave to recover from any side effects of having their Covid-19 vaccination. This means the employee will not have to use their annual leave or sick leave to receive or recover from their Covid-19 vaccination.

Employers must ensure they withhold tax under PAYG withholding and make superannuation contributions on the amount of paid leave, just as they usually would.

Bookkeeping Matters are certified bookkeepers and BAS agents and can manage your payroll, bookkeeping and reporting to ensure accuracy and prompt lodgement with the ATO.

Bookkeeping Matters has fine-tuned the bookkeeping experience to be efficient, proactive, and valuable to small to medium sized businesses in Australia. Empowering businesses is what drives her to deliver this first-rate service for clients of any scale and industry.

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Speak to our team to see how we can help you by calling June on 0423 003 552.

Reference: ICB Members Newsletter – February 2022

 Disclaimer: The information in this article is general information only.

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