Question

Mason is a car painter with Melbourne Collision Repair Centre. Mason studying BPA and his employer
pays for his course fees at Holmes Institute costing Mason $12,000. Also, Mason lives in a unit
apartment in Brisbane, which is provided to him by Melbourne Collision Repair Centre as his
employer as fringe benefit. The market value rent for the apartment is $500 per week, and Mason
pays $100 of rent per week for the apartment.
Required:
Advise the FBT consequences of Mason’s remuneration package (10 marks, maximum 200 words)
{Australian taxation}

Answer 1

FBT is paid by employer on making available certain facilities either at free of cost or at lesser than market value to employees as perquisitive. FBT is payable even if the benefit is provided by a third party under an arrangement with the employer.

A housing fringe benefit may arise if an employer provides their employee with accommodation rent-free or at a reduced rent where the accommodation is the employee's usual place of residence. Fringe Benefit value shall be equal to 75% of fair market value less any payment received, if residence is in Australia but not in remote area.

In this case, rent per month is 500*4=$2,000

FB value= 75%*2,000-4*100= $1,100

FBT tax on house fringe benefit = 47%*1,100= $ 517

A residual fringe benefit may arise when you provide an employee with any benefit (including a right, privilege, service or facility) that doesn't fall into one of the specific categories of fringe benefits.

In the given case, payment of tution fees by employer of $12,000 is fringe benefit and tax shall be 47% of $12,000= $5,640