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TAXATION LAW TAXATION LAW 9 9 Taxation Law Name of the University Author

   

Added on  2020-05-28

12 Pages2183 Words399 Views
Running head: TAXATION LAWTaxation LawName of the StudentName of the UniversityAuthors NoteCourse ID

TAXATION LAW1Table of ContentsPart A:........................................................................................................................................2Answer to question 1:.................................................................................................................2Case facts:..................................................................................................................................3Part B:.........................................................................................................................................6Answer to question 2:.................................................................................................................6Answer to question (A):.............................................................................................................6Answer to question (B):.............................................................................................................7Answer to question (C):.............................................................................................................8Answer to question (D):.............................................................................................................8Reference List:.........................................................................................................................10

TAXATION LAW2Part A:Answer to question 1:The employers generally provide the fringe benefits to their employees apart from thesalaries and wages. In accordance with the “FBTAA 1986”, this is can be notified that therelation between the employee and employer is necessary for receiving the benefits (Sikka,2017). This relation between among two individual enables the utilization of provision underFBTAA 1986 for determining the tax obligations for both the individuals (employee andemployers). As discussed in section 7 of the Fringe Benefit Tax Assessment Act 1986 if thebenefit provided by a company is a car then this will be constituted as the car fringe benefit(Mellon, 2016). This act highlights this fact that providing a car to an employee or providingthe car with lease agreement, this case will be resulting into the car fringe benefit tax for theemployee. According to the elaboration of the fringe benefits, this is clear that if theemployee uses the car for his personal usages instead of the private purposes then also thiswill be considered as the fringe benefit for the purpose of taxation. There are specifically two significant methods for determining the assessable valuefor car fringe benefits. These two methods include the statutory formulation methodology andoperating cost methodology. In case of this statutory methodology the considered assessableamount within the fringe benefit is calculated by the value of the whole car. In addition tothis, section 10A and 10 B of the FBTAA 1986 is considered as associated with theassessable value of the car fringe benefit in case of the operating cost method (Sharkey &Murray, 2016). According to the operating cost method, this involves the administration ofthe car and also determines the assessable income of involved within the fringe benefits. Oneof the important fact involved within these methods are the method, which is identified for

TAXATION LAW3lowest assessable value for the fringe benefit, is considered for calculation of fringe benefittax. For using the operating cost method, the employee will require the maintenance of theexpenditure involved in case of the logbook or any related document. Case facts:The case study incurs this fact that he is the employee of Shiny Homes Pty Ltd.,which provides him with a car. This car is allowed for personal as well private usages ofCharlie. In observance with section, 7 of the Fringe Benefit Tax Assessment Act 1986 all thebenefits provided to Charlie in the form of car will be included in car fringe benefit and willalso be calculated for taxation (Robin, 2017). For determining the assessable value of the carfringe benefit of Charlie both the methods are applied namely the Statutory Method andOperating Cost Method. In case of the statutory method, the statutory rate of 20% is appliedfor determining the fringe benefits involved within Charlie’s case here. The statutory rate for of 20% is generally multiplied with the base value for the car inorder to ascertain the assessable value of the fringe benefit. The degree of private utilizationmade by the employer is not taken in case of determining the assessable value related to thefringe benefit involved within the statutory Method. On the other hand, in case of theoperating cost method, the total amount for the operating cost involved in administration ofthe car is segregated within separation for the personal along with the private usages of thecar. This helps in determining the assessable value for the fringe benefit while calculating thetaxation for the particular car. Therefore, the calculation showed below highlights theStatutory Method as well as Operating Cost Method;

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