Taxation Consequences for Mason's Remuneration Package

TAXATION THEORY, PRACTICE AND LAW

Q1. Advise the FBT consequences of Mason’s remuneration package.
Based on the tax provisions that track the tax on support services, the manager is at risk of
paying FBT on the available estimate of the support services paid. to the employee throughout
the year from April 1 to March 31. The company is obligated to provide data relating to Fringe's
benefits in reducing employee's allowances if the tax estimate of Fringe benefits exceeds $ 2,000.
There are two strategies to network the benefits of Fringe to maximize the value available.
2.0802 if the boss can guarantee GST credit on Fringe benefits and 1.8868 if the boss cannot
guarantee GST on fringe benefits. The tax on Fringe benefits is determined at 47%.
In the given situation; since the above course is not a place identified by Mason's work, the
assessor’s reasoning is not accessible to him for such. As a result, $ 12,000 will be considered a
fringe benefit. Mason is also given housing and pays a $ 100 a week lease even though the rental
market estimate is $ 500 a week.
So the annual estimate of contingent benefits is:
$ 12,000 + ($ 500 - $ 100) * 52 = $ 12,000 + $ 20,800 = $ 32,800
Assuming the boss receives no GST credit, a net rate of 1.8868 will be used:
Fringe benefit tax estimate = $ 32,800 * 1.8868 = $ 61.887,04
Therefore, the Fringe benefit tax = $ 61,887.04 * 47% = $ 29,087
$ 61,887.04 will be included in the employee pay package as which Mason returns $ 61,887.04
in compensation according to the FBT of $ 29,087 should be recalled for the cost of the pay
package.
Q2.
a. Alex’s net capital gain or net capital loss for the year ended 30 June 2019 using both
Discount method and Indexation method.

As indicated by Section 110-25 (2) of ITAA 1997, the market estimate of the CGT Fund or the
amount paid for the gain must be indicated as the cost basis of the CGT Fund. Section 110-25 (5)
of the 1997 ITAA states that if any use is made to protect the estimate of the CGT Fund, it must
be incorporated into the cost basis. In the specific case, Alex estimated the land in 1986 as $
110,000 and shot $ 100,000 for development to motivate him to build the change upstairs in a
building suitable for rent. The total cost base for Alex is therefore $ 210,000. Alex sold the
property for $ 1,400,000 as of March 1, 2019. Assets are held for one year along these lines and
therefore a proprietary deal is subject to a capital increase.
Calculation of Net Capital gains by discounted method:
Particulars Amount $ Amount $
Sale price $ 1,400,000
Less:
Market value of land $ 110,000
Add: Amount spent for construction $ 100,000
Total cost $ 210,000
Capital Gain $ 1,190,000
Less: 50% discounted factor $ 595,000
Net Capital Gain $ 595,000
Calculation of net capital gain according to the index method:
The index method is applicable if the fund is received before September 21, 1999 and is held for
more than 12 months. Alex meets both situations.
The CPI for the September 1986 quarter is 43.2
Thus the index cost base will be $ 210,000 * 43.2 = $ 9,072,000
Particulars Amount $ Amount $
Sale price $ 1,400,000
Less:
Indexed Purchase cost $ 9,072,000
Net capital loss -$ 7,672,000