What is the requirement for an athletic facility to provide tax-free benefits?

The requirement for an athletic facility to provide tax-free benefits is that it must be located on employer-owned property and used by employees. This stipulation is important because it aligns with government regulations regarding fringe benefits and ensures that the facility is genuinely intended for the employees' use. When an athletic facility meets this criterion, it allows the employer to provide physical fitness and wellness benefits to employees without incurring additional tax implications.

When a facility is located on the employer's premises, it further establishes that the employer is fostering a healthy work environment and encouraging employee wellness. This can lead to improved employee productivity and satisfaction. If the facility were open to all public members or operated by a third party, it would not qualify under the same tax-free benefit regulations, as those arrangements do not focus specifically on the needs of the employees and their well-being.