“Sitting is the new smoking.” Who has not heard this catch phrase making its round on our national media? And it is true that uninterrupted sitting combined with physical inactivity elevates the risk of heart disease, high blood pressure, diabetes, cancer and other conditions. Decreased on-the-job productivity and health related employee absences increasingly poses a real threat to corporations’ bottom line.
It is therefore not surprising that investing in workplace wellness initiatives, such as providing corporate gym memberships for your staff, has a positive effect on both your staff’s health as well as your company’s health.
According to the Buffet National Wellness Survey, organizations with highly effective health and productivity programs report 11% higher revenue per employee, 1.8 fewer days absent per employee per year, and 28% greater shareholder returns.
Should you choose to provide your employees with a gym membership, please bear in mind that there may be tax implications for your employee as well as for your corporation. If your business pays club or membership fees for your employees or reimburses them for those fees, the amount paid (including HST) would be considered a taxable benefit to the employee. If this is the case, do not forget that a taxable benefit is also pensionable. You must therefore deduct income tax and CPP contributions. If the taxable benefit is paid in cash, it is insurable. Deduct EI premiums. If it is a non-cash benefit, it is not insurable. Do not deduct EI premiums.
However, the use of a recreational facility or club does not result in a taxable benefit for an employee if you either provide an in-house fitness facility that is available to all employees, or if you were to make arrangements to pay a fee to a recreational facility outside your company for a membership that belongs to your company rather than your employees. The key in this case is that the use of the facility must be made available to all employees, whether they choose to use it or not.
Unfortunately, you will not be able to claim any payments made to a gym as a business expense. The CRA does not allow “any deductions for an expense incurred by the corporation in respect of membership fees or dues on behalf of its employees, which entitles them to use a recreational or sporting facility”.
But sometimes a good business decision is not all about tax savings. Providing your staff with attractive benefits can help you and your company retain and attract good employees.