Are there any tax advantages to providing health club membership or facilities to employees?

I own a small business and am considering providing health club membership or facilities. Can you tell me what the payroll implications of this may be?

Businesses may cover the cost of athletic facilities or health club membership. If the facilities are onsite, then use of them by employees and their spouses and dependents is not taxable. However, the payment of club dues to an outside facility or health club is a taxable fringe benefit. While the cost of club dues generally is nondeductible, businesses can make such cost deductible by treating the payment as additional compensation and deducting it as such.