Question

In: Accounting

William is James’ employer. William paid the following payments on behalf of James. Item Payment by...

William is James’ employer. William paid the following payments on behalf of James. Item Payment by William Tax deduction had James paid $ $ Computer part 300 300 University fees 450 200 HELP charges 850 Nil Taxi fares 300 100 Required: Calculate is the taxable value for FBT purposes of the following payments. You must refer to relevant legislation and/or case law in your answer.

Solutions

Expert Solution

While calculating the taxable value of FBT, we should consider each benefit given by william to James :

1. Computer Parts : Work related items are exempt from FBT like Computer, laptop etc. But here William gave Computer parts to James for his personal interest, hence it is taxable.

2. University Fees : Educational benefits are covered under non - taxable benefits, so University fees is exempt for FBT.

3. Help Charges : As per its name it seems to be covered under emergency assistance. Any emergency assistance provided by employer is exempt from FBT if it is in the nature of :

  • first aid or other emergency health care
  • emergency
    • meals
    • food supplies
    • clothing
    • accommodation
    • transport
    • household goods
  • temporary repairs
  • any similar assistance.

4. Taxi fares : Any benefit arising from taxi travel by an employee is exempt from fringe benefits tax (FBT) if the travel is a single trip beginning or ending at the employee's place of work.

"Any benefit arising from taxi travel by an employee is also an exempt benefit if both of the following apply:

  • the travel is a result of sickness of, or injury to, the employee
  • the whole or a part of the journey is directly between any of the following
    • the employee's place of work
    • the employee's place of residence
    • any other place that it is necessary, or appropriate, for the employee to go as a result of the sickness or injury."

Assuming that the above conditions are satisfied, taxi fares are exempt for James.

Calculation of taxable value under FBT :

Computer Parts $ 300

University Fees NIL

HELP charges NIL

Taxi Fare NIL

Taxable Value $300


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