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6.6 Non-monetary employee benefits
Publication date: 30 Jun 2022
us Pensions guide
While not explicitly addressed in the authoritative literature, we believe that the cost of providing non-monetary benefits (including free or subsidized goods or services) should be recognized in the same manner as benefits payable in cash.
6.6.1 Non-monetary employee benefits measurement
The taxable benefit of a non-monetary benefit to the employee for personal income tax purposes is only an appropriate measure of the cost to the reporting entity if it approximates the fair value of the benefit. The amount recognized as an expense by the employer should be measured at the cost to the employer of providing the benefit. For example, the cost of providing an employee with a company car would be the depreciation charge if the car is owned by the reporting entity or it may be the cost the reporting entity pays to a third party for the lease of the vehicle to be used by the employee.
If the reporting entity sold an appreciated asset to an employee at a discounted price (e.g., book value), the reporting entity should record compensation cost for the difference between the fair value and the cash price, and a corresponding gain on disposition.
6.6.2 Non-monetary employee benefits presentation
If the cost of in-kind benefits (e.g., company car, company cafeteria) are already being recognized by the employer. There is no need to record a duplicate expense. However, it may be appropriate, depending on the nature of the employee’s services and the manner in which the employer presents its income statement, to recharacterize those costs as employee compensation.
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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