Taxation Methods for Fringe Benefits Tax Calculation

This document discusses the statutory method and operating cost method for calculating fringe benefits tax for different drivers. It provides step-by-step calculations and explains which method is suitable for each driver.

TAXATION
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Driver 1: Rohan Kumar
 Statutory Method: Taxable value of car fringe benefits would be computed through
statutory formula shown below.
Taxable value benefit of car=ABC/D-E
Where, A=base value of car =$180,000
B=Statutory rate=0.20
C=Number of days available for private use to employee in a tax year=365
D=Number of days in FBT year=365
E=Contribution by employee=$500
Hence, Taxable value benefit of car= ((180,000*0.20*365)/365)-500=$35,500
Fringe benefits tax payable = FBT rate * Taxable value benefit of car * Grossed up rate
The FBT rate for the year end 31 March 2019 is 47% and grossed up rate for type 1 good is
2.0802
Fringe benefits tax payable =47%*$35000*2.0802 =$34,708.137
 Operating cost method
Taxable value of car=C*(100%-BP)-R
Where,
BP=Business use %= (Business travelled)/(Distance travelled )*100=(15000/180000)=8.33%
R=Contribution made by employee=$500
C=Total operating costs
Depreciation =ABC/D= (180,000-25,800) *25%*365/365=$38,550
Deemed interest = (180,000-25,800) *7.40%*365/365=$11,410.8
Total expenses= $600+$1200+$250+$2500+$100=$4650
Hence,
C=4650+38550+11410.8=$54,610.8
Taxable value of car=C*(100%-BP)-R= {54,610.8*(100%-8.33%)-$500=$49,561.72
Fringe benefits tax payable = FBT rate * Taxable value benefit of car * Grossed up rate
The FBT rate for the year end 31 March 2019 is 47% and grossed up rate for type 1 good is
2.0802
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Fringe benefits tax payable =47%*$49,561.72*2.0802 =$48,456.2
Statutory method would be suitable for fringe benefits tax computation for Rohan as the FBT
payable comes out to be lower with this method.
Driver 2: Bob Maddick
 Statutory Method
Taxable value benefit of car=ABC/D-E
Where,
A=base value of car =$200,000
B=Statutory rate=0.20
C=Number of days available for private use to employee in a tax year=365
D=Number of days in FBT year=365
E=Contribution by employee=$600
Hence, Taxable value benefit of car=((20,0000*0.20*365)/365)-600=$39,400
Fringe benefits tax payable = FBT rate * Taxable value benefit of car * Grossed up rate
The FBT rate for the year end 31 March 2019 is 47% and grossed up rate for type 1 good is
2.0802
Fringe benefits tax payable =47%*$39400*2.0802 =$38,521.14
 Operating cost method
Taxable value of car=C*(100%-BP)-R
Where,
C=Total operating costs
=Lease amount + Expenses=$9000+($600+$2000+$400+$2800+$150) *(365/365) =$14,950
BP=Business use %=(Business travelled)/(Distance
travelled )*100=(12000/200000)*100=6%
R=Contribution made by employee=$600
Hence, Taxable value benefit of car={$14950*(100%-6%)}-600=$13,453
Fringe benefits tax payable = FBT rate * Taxable value benefit of car * Grossed up rate
The FBT rate for the year end 31 March 2019 is 47% and grossed up rate for type 1 good is
2.0802
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Fringe benefits tax payable =47%*$13453*2.0802 =$13,152.92
Operating cost method would be suitable for fringe benefits tax computation as the FBT
payable comes out to be lower with this method.
Deriver 3: Shub Patel
 Statutory Method
Taxable value benefit of car=ABC/D-E
Where,
A=base value of car =2/3* $150,000=$100,000 (car is held for more than 4 years)
B=Statutory rate=0.20
C=Number of days available for private use to employee in a tax year=365
D=Number of days in FBT year=365
E=Contribution by employee=$600
Hence, Taxable value benefit of car=((100,000*0.20*365)/365)-600=$19,400
Fringe benefits tax payable = FBT rate * Taxable value benefit of car * Grossed up rate
The FBT rate for the year end 31 March 2019 is 47% and grossed up rate for type 1 good is
2.0802
Fringe benefits tax payable =47%*$19400*2.0802 =$18,967.26
 Operating cost method
Taxable value of car=C*(100%-BP)-R
Where,
BP=Business use %= (Business travelled)/(Distance
travelled )*100=(40000/230000)=17.39%
R=Contribution made by employee=$600
C=Total operating costs
Depreciation =ABC/D = (150,000-35,000) *25%*365/365=$28,750
Deemed interest = (150,000-35,000) *7.40%*365/365=$8510
Total expenses= $650+$2500+$450+$3200+$200=$7000
Hence,
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C=28750+8510+7000=$44,260
Taxable value of car=C*(100%-BP)-R= {44,260*(100%-17.39%)-$600=$35,963.19
Fringe benefits tax payable = FBT rate * Taxable value benefit of car * Grossed up rate
The FBT rate for the year end 31 March 2019 is 47% and grossed up rate for type 1 good is
2.0802
Fringe benefits tax payable =47%*$35963.19*2.0802 =$35160.99
Statutory method would be suitable for fringe benefits tax computation for Rohan as the FBT
payable comes out to be lower with this method.
For Jason Wong
 Statutory Method
Taxable value benefit of car=ABC/D-E
Where,
A=base value of car =2/3* $150,000=$100,000 (car is held for more than 4 years)
B=Statutory rate=0.20
C=Number of days available for private use to employee in a tax year=365
D=Number of days in FBT year=365
E=Contribution by employee=$0
Hence, Taxable value benefit of car = ((100,000*0.20*365)/365)-0=$20,000
Fringe benefits tax payable = FBT rate * Taxable value benefit of car * Grossed up rate
The FBT rate for the year end 31 March 2019 is 47% and grossed up rate for type 1 good is
2.0802
Fringe benefits tax payable =47%*$19400*2.0802 =$19,553.88
 Operating cost method
Taxable value of car=C*(100%-BP)-R
Where,
C=Total operating costs
=Lease amount + Expenses=$7000+($450+$1500+$200+$3600+$150) *(365/365) = $12,900
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BP=Business use = (Business travelled)/ (Distance travelled) *100
= (30000/120000) *100=25%
R=Contribution made by employee=0
Hence, Taxable value benefit of car= {$12900*(100%-25%)}-0=$9675
Fringe benefits tax payable = FBT rate * Taxable value benefit of car * Grossed up rate
The FBT rate for the year end 31 March 2019 is 47% and grossed up rate for type 1 good is
2.0802
Fringe benefits tax payable =47%*$9675*2.0802 =$9459.189
Operating cost method would be suitable for fringe benefits tax computation as the FBT
payable comes out to be lower with this method.
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