COVID-19 Vaccination Incentives and Rewards – Your Tax and Super Obligations

If you provide your employees with incentives or rewards for getting their COVID-19 vaccination or booster dose, there may be tax and super consequences in doing so. 

The consequences differ depending on whether a cash payment, paid leave or non-cash benefit is provided.

If you provide non-cash benefits to your employees, you may have to pay FBT on these benefits unless there is an exemption such as the minor benefits, work-related preventative health care, or in-house benefits exemption applies.

The following examples provide a summary of the tax and super treatment of different types of incentives or rewards that may be given to employees for getting their COVID-19 vaccination.

Cash payment for getting the vaccine

If you give your employees a cash payment for getting vaccinated (for example, a $200 payment), you need to:

  • report the payment via Single Touch Payroll (STP) as part of the employee’s salary or wages
  • withhold tax from the amount under pay as you go (PAYG) withholding, and
  • include the amount in your employee’s ordinary time earnings for the purpose of determining your super contributions for your employee.

If you have already made a cash payment and did not withhold tax, you should contact the ATO straight away so that they can consider the remission of any applicable failure-to-withhold penalties. If you have not made super contributions, you need to ensure you make them no later than 28 days after the end of the quarter in which the cash payment was made, otherwise, you may be liable for the super guarantee charge.

Paid leave

If you give your employees paid leave to get their COVID-19 vaccination or additional paid leave to recover from any COVID-19 vaccination side effects, the employee earns salary or wages whilst they are on paid leave. You should withhold tax under PAYG withholding and make super contributions on the amount as you usually would.

Transport to and from the vaccination

If you provide or pay for an employee’s transport to get their COVID-19 vaccination, there is generally no fringe benefits tax (FBT) payable. The travel is associated with work-related preventative health care and is exempt from FBT. Refer Fringe benefits tax – a guide for employers – Chapter 20 – Exempt benefits

Other non-cash benefits

Other non-cash benefits you provide to your employees may be subject to FBT. Some samples of non-cash benefits may include:

  • goods and services
  • vouchers and gift cards
  • points in a reward scheme.

The FBT treatment of these kinds of benefits will depend on their specific terms and conditions, and the benefits may be subject to FBT unless an exemption or reduction applies.

The fringe benefits you provide may also need to be included in your employee’s reportable fringe benefits amount and reported on your employee’s income statement.

Refer Fringe benefits tax – a guide for employers – Chapter 20 – Exempt benefits

The ATO has published a fact sheet with more detailed information on COVID-19 vaccination incentives and rewards: COVID-19 vaccination incentives and rewards More information on COVID-19 and fringe benefits tax can also be found: CLICK HERE

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