Question

QUESTION 3

Discuss the Fringe Benefits Tax (FBT) implications of the following cases (a) – (e):

(Note - No calculations are needed. Only answer whether the employer is liable for FBT or not and why or why not)

(a) An employer provides a Christmas lunch at a local restaurant, costing $1,000, for 10 of its key employees.

(b) A sporting club, which pays its honorary treasurer an honorarium of $5,000 per year, providing a car to him. The car is used 90% for club business. The treasurer has a full-time job at the local hospital.

(c) An employer gives each of its 15 staff a leg ham each valued at $60 for Christmas.

(d) An employer allows its staff to take home their laptop computers. It is estimated that only half the work done at home is business related.

(e) A company director, not in receipt of any remuneration from the company, uses the company’s two-tonne truck while undertaking renovations to his own home.

Answer 1

A fringe benefit is a 'payment' to an employee, but in a different form to salary or wages.

A. Employer are not liable for fringe benefits, While the FBT law does not specifically deal with Christmas parties.all Christmas party food and drink provided by the employer that is consumed by a current employee at a party, provided the party was held at the employer’s premises on a business day.

B.it is fringe benefits because car is used for official and business purposes.

C.No this is not fringe benefits because, Fringe benefits are perks and additions to normal compensation that companies give their employees, such as life insurance, tuition assistance, or employee discounts. If a fringe benefit is transferred as cash, such as a bonus or reimbursement for travel or other expenses, they are likely to be subject to income tax.

D. Yes it works releated to office work..but there is no fringe benefit available Common fringe benefits are basic items often included in hiring packages. These include health insurance, life insurance, tuition assistance.

E. Fringe benefit not applicable. Because use of truck for his own purpose this work is not related to business.

Hopefully this will help you.