Computation of FBT Liability and Capital Gain/Loss

Taxation law

Table of Contents
Question 1........................................................................................................................................3
Question 2........................................................................................................................................5
Computation of capital gain or net capital loss for the year ended 30 June 2019.......................5
What Daniel will do with a likely net capital gain in this financial year?...................................8
What Daniel will do with a likely net capital loss in this financial year?...................................9
References........................................................................................................................................9

QUESTION 1
Fringe benefits tax is imposed on the employer with respect to the non-cash benefits provided in
the course of employment to the employees (McCormack, 2017). In the given case, the employer
provides a car to an employee, which is covered under the fringe benefit.
FBT Liability = Taxable value of the Fringe benefit * Gross-up value * Rate of FBT
There are two methods of computation of fringe benefit with respect to the car (White, and
Townsend, 2018).
Operating cost method
Taxable Value = Operating Cost * Private use – employee’s contribution
Table 1 Statement of total operating cost
Particulars Notes Amount
Depreciation 18000*25% $4500
Interest 18000*5.25% $945
Repair $3300
Insurance $2200
Fuel $990
Total Operating Cost 11935
*Depreciation and interest in the deemed operating cost and respective rates are charged on the
basis of the year ending 31st March 2019 (Australian Taxation office, 2019).