Report On Case of Taxation Law

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Author’s Note

1TAXATION LAW
Table of Contents
Issue.................................................................................................................................................2
Legislation.......................................................................................................................................2
Application......................................................................................................................................3
Car FBT Determination...............................................................................................................3
Employment Duties of an Itinerant Nature..................................................................................6
Fringe Benefit Tax for Car Parking.............................................................................................7
Fringe Benefit Tax on Accommodation......................................................................................7
Charlie and Shiny Homes Fringe Benefit Tax Consequences.....................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

2TAXATION LAW
Issue
In this report, the main issue is to determine the consequences of fringe benefits of Shiny
Homes and Charlie. The provided case states that Charlie works as a real estate agent and is
employed in Shiny Homes Pty Ltd. Shiny Homes is involved in the landscaping business and the
company has provided Charlie with a 4-wheel drive sedan. According to Section 6 of the
Miscellaneous Taxation Rulings and Fringe Benefit Tax Assessment Act 1986, there are
certain circumstances where fringe benefits tax will be levied on car.
Legislation
The relevant legislation in this case is mentioned below:
 Section 6 of the Miscellaneous Taxation Rulings and Fringe Benefit Tax Assessment Act
1986
 Taxation rulings of MT 2027
 Sub-section 136
 Sub-section 136 (1)
 Section 51 of the Income Tax Assessment Act 1997
 Sub-division F of Division 3
 Lunney and Hayley v FCT (1958)
 Newsom v Robertson (1952) 2 All ER 728; (1952)
 Simon in Taylor v Provan (1975) AC 194
 Section 5 of the Fringe Benefit Tax Act 1986
 Tubemakers of Australia Ltd v. FC of T 93

3TAXATION LAW
Application
Car FBT Determination
It is stated in taxation rulings of MT 2027 private use under sub-section 136 (1) that any
kind of use by the employees that is not for the purpose of generating assessable income will be
considered as Private Use. Sub-section 136 (1) includes valuation method of operating cost of
the business journey of the cars that is not associated with the private use. It is defined under
Paragraph 3 of the Miscellaneous Taxation Ruling that in order to determine the operating cost
of the cars, it is required to write down the kilometer travelled by the car for the personal use of
the employees in a particular logbook or any kind of similar documents (Lowe, 2014). It can be
seen in the provided case study that Charlie travelled a total of 50000 kilometer for his work
purpose. In order to determine the fringe benefit of the car used by Charlie, there will be
application of operational cost valuation method as per Sub-section 136 (1) of the
Miscellaneous Taxation Rulings of 2027 (Lignier & Evans, 2012).
There is a criticality in determining the business and private use. Thus, it is needed to
determine whether the employee uses the car or the associates for the generation of the
employee’s assessable income (Evans & Kerr, 2012). In this situation, as per Sub section 136
(1), this process includes the use of the car by the employee in order to generate assessable
income or to perform the business activities in order to generate the assessable income of the
business organization (Mountain & Szuster, 2014). This process also includes the use of the car
by the employee that the employer has provided to him in order to carry on the business
activities and this is eligible under Fringe Benefit Tax. In addition, the use of the car by the
associate of the employee and is carried out by the employee will also be considered for the use
of business purpose. As per the provided scenario, it can be seen that Charlie used the car