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fringe benefitsany additional benefits offered to employees, such as the use of a company car, free meals or luncheon vouchers, interest-free or low-interest loans, private health care subscriptions, subsidized holidays and share purchase schemes. In the case of senior managers, such benefits or perquisites (perks) can be quite substantial in relation to wages and salaries. Companies offer fringe benefits to attract employees and because such benefits provide a low-tax or no-tax means of rewarding employees compared with normally taxed salaries.
Fringe benefits are benefits received by an employee in addition to salary. Examples include educational assistance, moving expense reimbursement, stock options, and dependent care assistance. Some fringe benefits (for example, accident and health benefits, and group-term life insurance (up to $50,000)) may be excluded from the employee's gross income and, therefore, are not subject to federal income tax.