Taxation Law: Car Fringe Benefits Analysis for Acto and Jacob

This report examines the taxation implications of car fringe benefits, specifically focusing on the scenarios involving Acto and Jacob. It begins by defining car fringe benefits according to the relevant legislation, highlighting instances where a company provides a car for an employee's personal use. The report then calculates the taxable value of the fringe benefit using the statutory method, detailing the base value of the car, the statutory rate, and the number of days the car was available for private use. It also considers employee contributions. Furthermore, the report outlines the fringe benefit consequences for Acto, emphasizing the company's responsibility for the assessable value, and the income tax consequences for Jacob, noting how the grossed-up assessable value will appear on the payment summary. The analysis includes references to relevant taxation law and associated literature.

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the Student
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Table of Contents
Answer to question 12-1:...........................................................................................................2
1. The type of Fringe benefit provided by Acto:.................................................................2
2. The taxable Value of the Fringe Benefit:........................................................................2
3. The fringe benefit consequences for Acto:.....................................................................3
4. The income tax consequences for Jacob:........................................................................3
References:.................................................................................................................................4

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Answer to question 12-1:
1. The type of Fringe benefit provided by Acto:
As per “subsection 7 (1) of the FBTAA 1986” car benefit refers to benefit where the
company provides car to member of staff for their personal usage (Robin 2017). The
employer makes the car accessible for personal usage for a member of staff when the car is
originally used for private purpose or available for the worker’s private use.
A car which is garaged at the worker’s home is considered as the car is accessible for
personal use of the employee irrespective whether the car is used for private purpose. The
assessable value of the car can be computed by using either the statutory method or operating
cost method (Woellner et al. 2016). Under “section 39A”, a car parking fringe benefit might
take place when the car is parked at the site which is under the control of employer.
The type of fringe benefit provided by Acto to Jacob constitute car fringe benefit
since the car was provided to employee during the course of his employment.
2. The taxable Value of the Fringe Benefit:
Statutory method
Taxable value of fringe benefits
Particular Amount ($) Amount ($)
Base value of the car 66000
Statutory rate 20%
Car Available for Private use (Days) 221
Number of days in the FBT year 241
Gross Taxable Value of the Car Fringe benefit 12104.56
Less: Employee Contributions 1500
Taxable Value of the Car Fringe benefit 10604.56

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3. The fringe benefit consequences for Acto:
Acto would be accountable for paying the assessable value of car fringe benefit and
car parking fringe benefit under the statutory formula method. The chargeable value of the
car fringe benefit stands $10604.56 for Acto.
4. The income tax consequences for Jacob:
The grossed-up assessable value of car benefit would appear on the payment summary
for the income year. The taxable value of these benefits would appear on the payment
summary of the Jocob.

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References:
Robin, H., 2017. Australian taxation law 2017. Oxford University Press.
Woellner, R., Barkoczy, S., Murphy, S., Evans, C. and Pinto, D., 2016. Australian Taxation
Law 2016. OUP Catalogue.