Comprehensive Analysis of Residual Fringe Benefits Taxation

This report provides a comprehensive analysis of residual fringe benefits and their taxation. It delves into the definition of residual fringe benefits, differentiating them from other types of benefits and explaining how they are taxed. The report explores the concept of taxable value, including how it is calculated and the applicability of discounts, such as the 25% reduction for in-house benefits. It also outlines specific exemptions, such as the utilization of office equipment and home accommodation provided for work purposes. Furthermore, the report categorizes residual fringe benefits, including loans for equipment, employee benefits like child education payments, private travel arrangements, and sponsorships for events. References from relevant sources, such as the Australian National University (ANU) and Thomson Reuters, are cited to support the analysis. The report aims to clarify the intricacies of residual fringe benefits, providing a detailed overview of their taxation and related aspects.

TAXATION

Taxation
A residual fringe benefit takes place when an employer renders services or the property
utilization to an employee that does not appear in any other segment of the fringe benefit. It
needs to be noted that exemption can be availed where the employer provides a no private use
declaration and various other situations (Barcokzy, 2010). A residual fringe benefit surrounds
the services provided by the employer like travel or any manual work, or the utilization of
property. If the advantages consist of goods, as well as services then the component of goods is
valued as a property fringe benefit and services component are tagged as a residual fringe benefit
(ANU, 2017). On the other hand, if the goods supply is major to the services, the management
of repairs involves the spare support supply, the advantages can be considered totally as a
residual fringe benefit. Fringe benefit contains benefit on the employer’s behalf and to another
person on the employee’s behalf.
The taxable value of FBT of the residual advantage is computed in a different manner that
depends on whether it constitutes an external scenario or an in-house benefit. The otherwise rule
of deduction applies to reduce the value of taxation provided the required validation is satisfied
(Kenny, 2016). Taxable value can be denoted as the benefit’s cost price that means the market
value where the benefit will be deductible otherwise and even declined by the contribution of the
employee (ANU, 2017). For example, a 25%reduction will be present when the benefit pertains
to an in house benefit.
To ensure that exposure is not provided to fringe benefits in tune to the residual fringe benefits,
specific items that are utilized in the performance of the activities of employees must be
provided to the employees. Following are the exempt benefits
 The utilization of the equipment of the office for the activities of the employment apart
from the motor vehicles by an employee. This reflects that when the equipment is utilized
in contrast to the motor vehicles that constitutes exempt benefits (Fullerton et. at, 2017).
 Home accommodation is given to an employee that is needed for the purpose of work so
that one can stay at his/her usual residence.
There are various categories that define the residual fringe benefits. The below mentioned are
the categories for the residual fringe benefits:
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Taxation
Loan for equipment
Granting of the loan (equipment) like computer, instruments of music for the private purpose for
a longer time span.
Employees’ benefits
Payment made by the employee for the child education. This benefit pertains to the off-campus
center of child care.
Private travel
When a travel is arranged for the employee on a regular basis. It pertains to the employee that
includes travel insurance. Organization for private travel for the employee or family
Sponsor
A grant of access to the sporting or theatrical events on a continuous basis. This reflects that the
entertainment is provided to the employee and that will come under the categorization of residual
fringe benefits.
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Taxation
References
ANU. (2017). Residual fringe benefits. Accessed September 13, 2017, from
https://services.anu.edu.au/financial-management/taxation/residual-fringe-
benefits
Barcokzy, S. (2010). Australian Tax Casebook. CCH Australia Ltd
Fullerton, I.G, Deutsch, R, Friezer, M.L, Hanley, P & Snape, T. (2017). The Australian Tax
Handbook Tax Return Edition 2017. Thomson Reuters: Australia
Kenny, B. V. (2016). Australian Tax 2016. Thomson Reuters (Professional) Australia Limited
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