Hi, if a company gives prepaid Visa Cards for a value of $500 per employee, in recognition of years of service / employee retention bonus. Would this be treated as a Non-Cash benefit and would attract Fringe benefits tax? OR would this be treated as Cash-Benefit, hence income for the employee, and would be subject to PAYG and Superannuation?
Hi @NatCR14,
Prepaid Visa cards given to employees are generally treated as cash benefits, not non-cash benefits, for tax purposes. This means they would be subject to pay as you go (PAYG) withholding and superannuation, and the value would be included in the employee's assessable income rather than attracting fringe benefits tax (FBT).
The key factor is whether the benefit is convertible to cash. Prepaid Visa cards are considered convertible to cash because employees can use them to purchase goods and services in the same way as cash. This makes them ordinary income rather than a fringe benefit subject to FBT.
If you provided a cash bonus instead of a benefit, you wouldn't have to pay FBT. The employee would pay income tax on the amount through PAYG withholding. This is effectively what happens with prepaid Visa cards since they function as a cash equivalent.
You'll need to include the value of these prepaid cards in your employees' wages, withhold tax through PAYG, and ensure superannuation is calculated on the total amount. The cards should be reported through Single Touch Payroll as part of their regular salary and wages.
For more info about the difference between cash and non-cash benefits, you can review the guidance on fringe benefits tax and PAYG withholding obligations for employee payments.
Hi @NatCR14,
Prepaid Visa cards given to employees are generally treated as cash benefits, not non-cash benefits, for tax purposes. This means they would be subject to pay as you go (PAYG) withholding and superannuation, and the value would be included in the employee's assessable income rather than attracting fringe benefits tax (FBT).
The key factor is whether the benefit is convertible to cash. Prepaid Visa cards are considered convertible to cash because employees can use them to purchase goods and services in the same way as cash. This makes them ordinary income rather than a fringe benefit subject to FBT.
If you provided a cash bonus instead of a benefit, you wouldn't have to pay FBT. The employee would pay income tax on the amount through PAYG withholding. This is effectively what happens with prepaid Visa cards since they function as a cash equivalent.
You'll need to include the value of these prepaid cards in your employees' wages, withhold tax through PAYG, and ensure superannuation is calculated on the total amount. The cards should be reported through Single Touch Payroll as part of their regular salary and wages.
For more info about the difference between cash and non-cash benefits, you can review the guidance on fringe benefits tax and PAYG withholding obligations for employee payments.
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