Motivating employees requires creative thinking on the part of managers and business owners. Many theorists have proven that salary alone is simply not enough. In fact, salaries generally ranked considerably down the list of what spurred employees on.

There are some motivators which can be provided to employees without being classified as "income" and are therefore not considered taxable benefits in the eyes of Canada Customs and Revenue Agency (CCRA).

Who doesn't like receiving a gift? As an employer, you may present your employees with a gift in cash or kind not exceeding $500. You as the employer, may claim it as an expense in calculating your taxable income, it is not deemed a taxable benefit to your employees. This may be done once per year with the following exception ... if the employee marries during the year, two gifts are allowable!

It seems that people are becoming more health conscientious these days. Fitness clubs have been opening and memberships are on the rise. In recognizing the benefits of a healthy employee to the company, some organizations have their own health studios available for use by their employees. Where this is not financially feasible, membership payment may be made by the employer on behalf of the employee and not be taxable to the employee where membership is deemed primarily for the benefit of the company.

Health care benefits are considered non-taxable when the employer makes payment to a private health care plan. Many organizations are offering "cafeteria" style health care benefit plans. This style of benefit plan occurs where the employee is given a certain number of credits and can use these credits to "purchase" the health care benefits which are important to them. They may be able to change their benefits as their life circumstances change. A single employee's health care wants and needs may be different from those of an employee with a family whose needs may be different than those of an employee who has become an "empty nester." Cafeteria style health care benefits allow the employee to chose what is right for them.

While not all organizations have merchandise that appeals to their employees, those that do may want to consider offering that merchandise to their employees at a discount and it is usually not considered a taxable benefit to the employee. The discount must be reasonable and not below the cost that the company paid.

How about throwing a party to recognize and celebrate a company achievement in which the employees participated? Such achievements might include becoming ISO certified, reaching a sales target, improving workplace safety, reducing sick time, or reducing manufacturing downtime to name just a few. As long as the function is generally open to all employees and the expenses are reasonable (CCRA suggests $100 per employee) it is considered non-taxable to the employee.

Education of employees is important to the success of any organization. Courses and training are considered non-taxable to the employee where they are of benefit to the employer. Courses and training are considered a taxable benefit to the employee when they are mainly for the benefit of the employee. Along this same line are the payment of professional membership fees which are considered non-taxable as long as the benefit is primarily seen to be that of the employer.

Talk to your Accountant and get creative where your employees are concerned. The costs incurred is non-taxable benefits to your employees may be far outweighed by the benefits you receive in return!

Copyright - Kelly Melanson, Certified Management Accountant