Taxation Law and Practice Tax

LAW 2471
Taxation Law and Practice
Tax Technical Problem Assignment
Group Members
Official Name (Last Name, First
Name)
Student number
Joseph Alshaer s3695836
Hussain, Muzamil s3760574
Other Details
Class Day & Time: 2.30-5.30 Tuesday
Lecturer’s Name: Venkat Narayanan
DeclarationThe abovementioned students have worked together as a group and the
work presented herein is our combined effort and we will be jointly held
responsible for its content.
Word Count: 1378

Date 17 April 2020
To Dr Harry Holy
From United Lawyers
CC
Subject Technical Advice for Dr Harry Holy
Dear Harry,
Concerning your request in which you sought our advice concerning your
assessable income, Tax residency and other administrative considerations
please note the following: After careful consideration of the tax
implications resulted from your job offer, we outlined below the facts for
your considerations.
Question 1
The fringe benefits tax regime
Issue: Whether or not the car provided by the employer qualifies as a car
fringe benefit
Rule: Regarding S7(1) a
“car fringe benefit arises” where an employer
make available a car for an wage earner personal usage. “Private use”
implies any usage of a car which is not wholly in the progression of
creating
“assessable income”: s136.
Application:
The
“statutory formula” method S9:
0.2 * Base value of the car * (no of Km for private use/ no of Kms during
the tax year)-any contribution from the recipient.
FBT taxable amount = 0.2 * 48730*(24000/40000) =5847
Conclusion: the sum of 5847 would be taxed as a car fringe benefit.
LAW2471 Research AssignmentSemester 1 2020 Page 1

Issue: Whether or not the meal allowance qualifies as entertainment
fringe benefit.
Rule: According to TR97/17, any entertainment provided by the employer
by way of food or drink is a
“meal entertainment fringe benefit”.
Application:
We can exercise the 50/50 method:
Taxable value: Total amount during FBT year/2
Taxable value: 25000/2= AU12500
Conclusion: the employer must pay FBT on AU 12500.
Issue: Do the payments of rents qualifies as expense fringe benefits
Rule: Regarding the rule S21, certain accommodation expenditure
imbursement
“fringe benefit” where the member of staff is needed to stay
away from their normal house.
Application:
According to S 23,
“external expense payment fringe benefit” = the sum
of the expense or “reimbursement occured” by the employer
FBT taxable amount = (250+250) * 52 week = AU26000.
Conclusion: the sum of AU26000 will be taxed by ATO as an expense
fringe benefit.
Issue: Whether or not the airfare ticket and accommodation expense is a“residual fringe benefit”.
Rule: As per S45, any provision for a benefit from an employer to an
employee which do not fall into any other groups of
“fringe benefits”, is
a
“residual fringe benefit”.
Application: Following to SS 50 and 51, any external residual fringe
benefit, the taxable amount is the cost to the employer AU 3000.
Conclusion: The value of AU3000 is a residual fringe benefit.
LAW2471 Research AssignmentSemester 1 2020 Page 2