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HI6028 Assignment Taxation Law - Fringe Benefits

   

Added on  2020-05-28

10 Pages1595 Words150 Views
Running head: TAXATIONTaxationName of the Student:Name of the University:Authors Note:

1TAXATIONTable of ContentsAnswer 1..........................................................................................................................................2Answer 2..........................................................................................................................................7Section A......................................................................................................................................7Section B......................................................................................................................................8Section C......................................................................................................................................8Section D......................................................................................................................................9References:....................................................................................................................................10

2TAXATIONAnswer 1 It can be mentioned that any benefit paid to employees in addition to the wages and salarypayable to them are referred to as Fringe benefits as stated in the Fringe Benefits tax AssessmentAct 1986. To establish the provisions of tax legislation dealing with fringe benefits and taxliabilities of employees a beneficiary relationship between the employer and employee has to beprovedIt is to be mentioned that section 7 of the Fringe Benefit Tax Assessment Act 1986 dealswith the provision of the fringe benefit related to car. According to this section of theaforementioned act it can be mentioned that if an employee is allowed to use the car, owned ortaken on lease by the employer, he will be held liable to pay fringe benefit tax. Even if the car isused by the associates of the employee for private purpose and not used by the employeehimself, the employee will be liable to pay fringe benefit tax (Bravermanet al. 2015).It is to be mentioned that statutory formula method or the operating cost method is to beused for calculating the taxable value of the fringe car benefits. The same is stated in section 9 ofthe Fringe Benefit Tax Assessment Act 1986. The real cost of the car is to be considered forcalculating the taxable value of the fringe benefits by the statutory formula method. However,the operating cost of the car is calculated while assessing the value of taxable fringe benefits bythe operating cost method. Of the two aforementioned methods , the one which yields the lowestvalue will be considered to ascertain the FBT. All necessary documentation is necessary forusing the operating cost method.

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