Management Accounting: Tax Consequences for Purchasing Manager of Nourished Organic Skincare of Australia Pty Ltd (NOSA)

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of Student
Name of the University
Authors’ note

1MANAGEMENT ACCOUNTING
Table of Contents
Answer to Question 2:................................................................................................................2
Situation 1.1:..........................................................................................................................2
Situation 2.2:..........................................................................................................................4
Situation 3.3:..........................................................................................................................5
Situation 4.4:..........................................................................................................................6
References:.................................................................................................................................7

2MANAGEMENT ACCOUNTING
Answer to Question 2:
Betty is the purchasing manager with Nourished Organic Skincare of Australia Pty
Ltd (NOSA). The company is mainly engaged in buying organic skincare products from local
manufacturers and normally sell them to the public at NOSA stores all over Australia. The
purchasing manager Betty received his annual amounted to $90,000, excluding fringe
benefits. Here the purchasing manager of the company NOSA has faced some tax
consequences during the financial year 2018-19.
Fringe Benefits Tax is normally assessed under the Fringe Benefits Tax (FBT)
Assessment Act, 1986 (FBTAA). As per the provisions of this act every employer is required
to pay fringe benefits tax on their paid fringe benefits taxable amount for the particular year
of tax at the rate, which is set out in the FBTA (Barkoczy, 2019).
Situation 1.1:
Generally, according to the provision of Section 136(1) of FBTAA, fringe benefits are
one type of payment benefits, which is related to past expense. Expense payment benefits
normally arise where a person pays for or reimburses some of his expenditure that is incurred
by some other person as per section 20. Reimbursement of expenditure amount is usually
occurring where the recipient is compensated precisely for the total amount or a part of
expenses that already incurred (Barkoczy, 2019). However, such amount may not necessarily
have been disbursed as per Tax rule 92/15.
According to the problem, Betty, the general manager of NOSA, paid telephone bills
amounting to $600. However, as the telephone is partly used for a private purpose and partly
for the use of the business, the company NOSA reimbursed her $400 for using the phone for
business purpose. Here two tax consequences are arises; one is the provision relating to