Fringe Benefits Tax Implications Report: Tax Analysis

This report provides a detailed analysis of fringe benefits tax (FBT), examining its implications under the Income Tax Assessment Act 1997 (ITAA 1997) and the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986). The report explores various types of fringe benefits, including car fringe benefits, res...Read More

Running head: TAX
Tax
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Issue:..........................................................................................................................................2
Laws:..........................................................................................................................................2
Application:................................................................................................................................4
Conclusion:................................................................................................................................6
References..................................................................................................................................7

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Issue:
In the given case the issue of the concern is to understand the fringe benefits tax implecation
of the tax payer who is assessable to pay taxes.
Laws:
Under the governance of the "section 6-1 of the ITAA 1997" income with the help of
individual effort or the earning got from the individual assertion for the various sources of
income such as salaries, wages, commission, allowances, superannuation or other type of
continues that the person paying tax got with regard to the administration put into (Endres &
Spengel, 2015). On the basis of the employment offering personal administrations may be
related to income tax with the end goal of the worker or fringe benefit tax in case of the
company. For earnings to be delegated revenue there has to be a link with the earnings
starting from the private administration of person paying tax.
The link is clearly settled for the normal things of private administrations that
incorporates the payments of the commissions or any type of subordinate payments which
are within the occurrence of work. "Section 6-5 of the ITAA 1997" characterizes that
income in view of the ordinary ideas is can be taxed under the "ITAA 1997". Ordinarily
under "section 6-5 of the ITAA 1997”, lion's share of the earning that comes to the person
paying tax is considered as ordinary profits (Enste, 2018). The legal importance of the profits
is expressed on account of "Scott v Commissioner (1935)". The commissioner referred for
the learnings of the ordinary business ideas and utilisation of humanity.. A thing of salary
nature is determined for the person who pays tax when it gets back home. The court in
"Senior member v FC of T (1997)" referred the maintenance instalment that is delivered to
the workers for consenting to stay utilized for the time of a year after the appropriation were
viewed as the earning or compensation from the service.
The fringe benefit payments are made to the workers as additional benefits out of the
normal course of wage payments. According to the statute of fringe benefit tax, it is about the
benefit that is given in connection to the service. This adequately implies the advantage that
is given to somebody because of the way they are representative. The car fringe benefit is
characterized under "subsection 136 (1) of the FBTAA 1986". By prudence of the service
utilization of car by the worker establishes benefit under the "subsection 136 (1) of the

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FBTAA 1986". According to the fringe benefit tax regulation, it is about the benefit that is
offered in regard of the employment (Frey & Feld, 2018).
A car marginal benefit more often than not starts when the company furnishes the
worker a car for the private utilization or the representative. The fringe benefit is considered
as the excused income for the reason in the beneficiary's hands (Hanlon et al., 2015).
Residual marginal benefit incorporates any sort of private, administrations or the
office that is given to the worker in basis of the employment. A residual fringe benefit may
include giving administrations to be specific the travel or proficient or the physical work or
any utilization of possessions (Parker, 2018). As the over-all administer, the outstanding
fringe benefit is viewed as benefit got when a worker is furnished with the specific advantage
over the time. The bundles plan incorporate s and aggregates compensation game plan that
are on signed by the parties to the employment is that the employer and employee.
A credit fringe benefit begins when the company gives the advance fringe benefit to
worker bring down measure of enthusiasm amid the fringe benefit tax year. A lower rate of
intrigue is one that is not as much as the statutory rate of the loan fee (Saad, 2014). The
taxable estimation of credit fringe benefit is about the contrast between the interests that
would have accumulated among the fringe benefit if statutory intrigue has been connected in
the underlying loan cost that really gathered.
As held on account of "Moore v Griffiths (1972)" just receivable from the prize isn't
considered as earning. Be that as it may, it would be considered as income if there are
adequate association with the revenue producing exercises of the individual paying tax. As
held because of "Kelly v FCT" the person paying tax got an honour from the company for
being the finest and most attractive player (Sharkey, 2015). The sum would be considered as
the earning since it was coincidental to the work and service and was identified with the
activity of expertise. Thus, on the basis of "FC of T v Stone" the person was the woman
working in police and the lance hurler that earned revenue through support and prizes. The
person was evaluated for the continuing on the matter of the expert competitor and the cash
was held as revenue.
In the case of non-monetary benefits where the gifts or services are not comparable in
to monetary term then in that cases it would not be regarded as normal income. Referring to
the decision of the court’s verdict in the case of “PAYNE VS FCT” the regular customer

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claims that are related with the business travel are to be considered as income. Whereas the
non-monetary income will be chargeable to tax under section 15-2 of the ITAA 1997.
Normally, when the spending has been done by the worker for the company and the
costs are in this way repaid by the company, it offers ascend to the cost instalment fringe
benefit. The taxable estimation of the cost fringe benefit is the sum that is repaid or paid. In
the event that the worker happened an expenditure totally to perform the service related
obligations, the spending would be completely considered liabke for deduction for the
income tax. For the most part, in which the costs been caused by the worker for the company
while the compensation of such gain results in the emerge of fringe benefit (Basu, 2016).
Application:
The presented case attracts the fringe benefits tax as Jamie works as an operator for
the Houses of R us., a land company. On basis of the service contract Jamie was given the
remuneration of $50,000. Regarding "section 6-1 of the ITAA 1997" the receiving of
remuneration is about revenue from the individual effort. The service receipt of $ 50000 ,
speaks to the earning from the individual administrations that is subjected to income tax
(Faccio & Xu, 2015).
Under "section 6-5 of the ITAA 1997”, the income is considered as ordinary income
under the normal ideas. Alluding to the instance of "Scott v Commissioner (1935)" receipts
of salary ought to be considered as revenue in view of the ordinary ideas of "ITAA 1997".
Referring to the instance of "Senior member v FC of T (1997)" the salary got will be
considered as compensation from the service (Altshuler et al., 2015).
Car Fringe Benefits:
In the given case, a car provides the assesse by the employer for the personal and office
purposes. The utilisation of the car denoted and attracts the section 136 of the FBTTAA 1986
as Benefits that are received in the course of the employment. In addition to that the car
allowance will be regarded as the service provided by the employer to the employee of the
company, the cost of fuel and other expenses will be allotted as the fringe benefits and will be
taxable in the hands of the tax payer.
Residual Fringe Benefit:

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In the next operational year the company come with a remuneration package that
includes a laptop and a mobile costing $ 2300 and $ 1200 respectively. The company
likewise reimbursed a measure of $550 and furthermore gave the diversion remittance
towards Jamie. In the current circumstance Jamie, the worker for his company House R Us
has brought about the costs while the payment of such benefit by the company brings about
emerging of fringe benefit. Subsequently, Jamie will be liable for fringe benefit taxation
under "FBTAA 1986".
Jamie got the prize of $4,800 for accomplishing the most astounding deals over the
most recent a half year. The prize for his supervision his was compensated with home
diversion framework for an aggregate of $4,800. Referring to the instance of "Kelly v FCT"
the home theatre arrangement of worth $4,800 would be viewed as non-monetary benefits
that are exchange values in cash. Further, the money will be regarded as revenue as it was an
integral part of the efforts and service. The total of $4800 is a part of reword of services of
the employee.
Loan Fringe Benefit:
In the contest of the transactional situation the Houses R Us agree to pay a aggregated loan
amount of $100000 for obtaining their house for a interest rate of 4% per annum. The
taxpayer accepts the option. The conviction of the fringe benefit is arising on the basis of the
rate charged on the loan amount is that the interest percentage is lower than the statutory rate
of intrigue or the applicable standers loan costs. Since the company is charge, less amount of
interest from its employee the amount of fringe benefits enjoyed will be the balance of the
standard interest rate and the current rate of interest (4%). The amount will be taxable in the
hands of Jamie.
(Altshuler et al., 2015).
Presented contextual analysis is relative and deciding the marginal benefit tax results
for Jamie functioning as the operator for Houses R Us, a land company. As the part of the
service contract Jamie was given the remuneration of $50,000. Regarding "section 6-1 of the
ITAA 1997" the receiving of remuneration speaks to revenue from the personal effort. The
receipt of $50,000 from the service is about the revenue from the personal commands that is a
subject to income tax.

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Under the statute "section 6-5 of the ITAA 1997" the remuneration would be
considered as normal earning under the usual ideas. Alluding to the instance of "Scott v
Commissioner (1935)" receiving of remuneration ought to be treated as revenue in light of
the ordinary ideas of the "ITAA 1997". Referring to the instance of "Senior member v FC
of T (1997)" the salary got will be portrayed as compensation from the service.
Conclusion:
As to conclude, the salary accepted by Jamie would be liable to be taxed under the
regular significance of the "section 6-5 of the ITAA 1997". While the utilization of car by
Jamie comprises fringe benefit under “subsection 136 (1) of the FBTAA 1986".
Furthermore, the whole of $4,800 establish a prize for the service benefit and would be
considered as the earning since there are adequate association with the Jamie's revenue
producing exercises. In this way, Jamie will be liable to be taxed for the cost of fringe benefit
as his worker repays the costs that has taken place.

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References
Altshuler, R., Shay, S., & Toder, E. (2015). Lessons the United States can learn from other
countries’ territorial systems for taxing income of multinational corporations.
Basu, S. (2016). Global perspectives on e-commerce taxation law. Routledge.
Endres, D., & Spengel, C. (Eds.). (2015). International company taxation and tax planning.
Alphen aan Den Rijn: Kluwer Law International.
Enste, D. H. (2018). The shadow economy in OECD and EU accession countries–empirical
evidence for the influence of institutions, liberalization, taxation and regulation.
In Size, Causes and Consequences of the Underground Economy (pp. 135-150).
Routledge.
Faccio, M., & Xu, J. (2015). Taxes and capital structure. Journal of Financial and
Quantitative Analysis, 50(3), 277-300.
Frey, B. S., & Feld, L. P. (2018). Illegal, immoral, fattening or what?: How deterrence and
responsive regulation shape tax morale. In Size, causes and consequences of the
underground economy (pp. 27-50). Routledge.
Hanlon, M., Maydew, E. L., & Thornock, J. R. (2015). Taking the long way home: US tax
evasion and offshore investments in US equity and debt markets. The Journal of
Finance, 70(1), 257-287.
Lang, M. (2014). Introduction to the law of double taxation conventions. Linde Verlag
GmbH.
Parker, H. (2018). Instead of the Dole: an enquiry into integration of the tax and benefit
systems. Routledge.
Saad, N. (2014). Tax knowledge, tax complexity and tax compliance: Taxpayers’
view. Procedia-Social and Behavioral Sciences, 109, 1069-1075.
Sharkey, N. (2015). Coming to Australia: Cross border and Australian income tax
complexities with a focus on dual residence and DTAs and those from China,
Singapore and Hong Kong-Part 1. Brief, 42(10), 10.

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Wilkins, R. (2015). Measuring income inequality in Australia. Australian Economic
Review, 48(1), 93-102.