menu
Tax Treatment for Vaccine Incentives

Employers who provide various incentives or rewards to their employees for taking a Covid-19 vaccination may have income tax, superannuation and FBT obligations, depending on the nature of such arrangements. The ATO has summarised its views of these obligations which confirms the expected income tax and FBT position for incentives or rewards, whether in cash or kind. So in short, there is no special concessional tax treatment available for Covid-19 vaccine-related arrangements.

Cash Payment for Getting the Vaccine

If you give your employees a cash payment for getting vaccinated, 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
  • Include the amount in your employee’s ordinary time earnings for the purpose of determining your super contributions for your employee
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, your employee earns salary or wages while 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.

Other Non-Cash Benefits

Other non-cash benefits you provide to your employees may be subject to FBT. Non-cash benefits could 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 and 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.

The information contained on this website and in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. Taxation, legal and other matters referred to on this website and in this article are of a general nature only and are based on our interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.

View Comments