Assignment on Taxation Law

Added on - 28 May 2020

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Running head: TAXATION LAWTaxation LawName of the StudentName of the UniversityAuthors NoteCourse ID
1TAXATION LAWTable of ContentsAnswer to question 1:.................................................................................................................2Determination of the Car FBT:..................................................................................................2Answer to question 2..................................................................................................................5Answer to Part (A):....................................................................................................................5Answer to Part B:.......................................................................................................................6Answer to question Part (c ):......................................................................................................7Answer to part (D):....................................................................................................................8Reference List:.........................................................................................................................10
2TAXATION LAWAnswer to question 1:Fringe benefit tax is the tax that is payable by the employers for the benefits that isprovided to the employee in the place of salary or wages. There are several types of fringebenefit, which are as followsa.Car fringe benefitb.Car parking fringe benefitc.Entertainment fringe benefitd.Expenditure payment fringe benefite.Loan fringe benefitf.Debt waiver fringe benefitg.Housing fringe benefith.Board fringe benefiti.Living away from allowance fringe benefitTo calculate the fringe benefit there are two separate gross up ratea.Higher gross up rate: Under this rate an individual is entitled to GST credit for theGST amount paid on the benefits by the employeesb.Lower gross up rate: Under this there is no form of entitlement to GST credit.The current study is based on the determination of the fringe benefit tax for Charlie.The study introduces that Charlie working as real estate agent. His employer Shiny Homesalternatively, has given Charlie a sedan.“Section 7 of the MT ruling 2027”and“FBTAA1986”puts forward the situations where the car is subjected to fringe benefit taxation.
3TAXATION LAWDetermination of the Car FBT:“Sub-section 136 (1)of the MT ruling of 2027”provides that any private use of carby the employee or associate that are not in the course of generating employment income willbe treated as private use of the car (Miller and Oats, 2016). As evident from the casesituations it is noticed that Charlie had travelled 80,000 km out of which 30,000 km were forhis private use. By virtue of the definitions that has been provided under the“sub-section136 (1)”any form of use made for the car by the employee which is not absolutely in thesequence of deriving computable salary of the employee would establish private use of thecar (Hughes, 2014).“Paragraph 3 of the FBTAA 1986”defines that cost incurred in thebusiness journey must be incorporated in the log book or any similar document given that thework related kilometres travelled by car is used in the application of operating cost method.Alternatively, statutory method is employed in the determination of the fringe benefittax for car.“section 10A and Section 10 B of the FBTAA 1986”is concerned withdetermining the taxable value of the car in respect of the operating cost method (Snape & DeSouza, 2016).“Under section 9 of theMiscellaneous Taxation Ruling 2027”provides thestatutory formula process for determining the car fringe benefit. The figure that is derived byenacting the statutory calculation in regard to the actual value of the car to the employee isallocated in respect of the number of days during which the car was available or used by theemployee for the purpose of private use (Lang, 2014). The statutory method for calculatingthe assessable value of the fringe benefit tax for car is 20%.The statutory percentage is multiplied with the base value of the car so that thechargeable rate of the fringe benefit can be obtained (Barkoczy, 2016). The amount ofpersonal use of car by the member of staff is not applicable in the determination of thecalculable value of the fringe benefit under the statutory method. On the other hand, the
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