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Fringe Benefits: Let's Get Physical

If you pay an employee's membership fees to an athletic facility, the payments are taxable to the employee as compensation. However, you can get around the restrictive tax rules through a little-known loophole in the law.

The benefit of using an employer-provided athletic facility on the business premises is exempt from tax. The term “athletic facility” includes any gym or other athletic facility such as a pool, tennis court or golf course. To qualify for this tax break, you must meet the following requirements.

*The facility must be located on the premises owned or leased by the employer.

*The employer must operate the facility either through its own employees or by contract.

*Substantially all of the use of the facility during the calendar year must be by employees, their spouses and their children.

In other words, the “company gym” can become a valuable fringe benefit for employees who burn the midnight oil at the office or get an early start to the workday.

Tax bonus: Unlike most fringe benefits, use of an on-site facility doesn't have to be offered to the entire workforce. It can be limited to just a chosen few—or even just the business owner and family.

If you pay an employee's membership fees to an athletic facility, the payments are taxable to the employee as compensation. However, you can get around the restrictive tax rules through a little-known loophole in the law.

The benefit of using an employer-provided athletic facility on the business premises is exempt from tax. The term “athletic facility” includes any gym or other athletic facility such as a pool, tennis court or golf course. To qualify for this tax break, you must meet the following requirements.

*The facility must be located on the premises owned or leased by the employer.

*The employer must operate the facility either through its own employees or by contract.

*Substantially all of the use of the facility during the calendar year must be by employees, their spouses and their children.

In other words, the “company gym” can become a valuable fringe benefit for employees who burn the midnight oil at the office or get an early start to the workday.

Tax bonus: Unlike most fringe benefits, use of an on-site facility doesn't have to be offered to the entire workforce. It can be limited to just a chosen few—or even just the business owner and family.

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