Question

Determine whether or not the following benefits are fringe benefits. Provide your reasoning with any relevant reference(s).

1. A cancellation fee paid by an employee to the travel agent in relation to an employer-arranged conference.

1. A private-use portion of the operating expenses of a taxi.

1. A company provides a car to the managing director for both business and private uses. As the managing director’s licence has suspended for 4 months, the company provides the services of a chauffeur to the managing director and subsequently invoiced for $10,000.

1. An employer provides biscuits and a fruit platter for the employees to consume on a working day and on the business premises.

1. An employer takes out 10 management staff to a restaurant for meal and alcohol to celebrate the end of a successful year, which costed $2,000 in total (or $200 per employee). There was no other non-cash benefit provided to the management staff during the FBT year.

1. A QANTAS Club membership provided to all employees who travel overseas, which allows access to QANTAS airport lounges.

1. A taxi fare paid for an employee. The employee travels between home and work each day and stops over at McDonald’s on some mornings to buy breakfast on his way.

Answer 1

Fringe benefits are a type of benefits which are received by the employee's of any entity in kind,provided over and above their salary/wage. some examples of fringe benefits are: use of company owned vehicles, employee stock option sheme, cafeteria expenses, life/ health insurance,etc.

As per the FBT tax law's:

-cancellation fee paid by employee to travel agent is NOT a fringe benfit. Normally any such expenditure by the employer to send the employee to any conference can be taken as fringe benefit but here we can see a reverse situation where the travel plan is cancelled and the employee paid a cancellation fee which cannot be admisable as the mistake of the company and hence charged in the hands of the employee only.

- private use portion of the expenses of taxi is A fringe benefit to the employee and also taxable in the hands of employee,any expenses on taxi which is used for professional use is only acknowledge as non taxable fringe benefit i.e,. any taxi travel originating from home to workplace and visa-versa is only exempted.

-the use of companies car along with chauffer by the director is an exempted fringe benefit .use of car for professional and minor private use is exempted as per FBT act and the provision of chauffer and the charges thereon are taxed at the hands of the director .

- The provision of fruits and biscuits by the employer in the business premises to the employee is A fringe benefit and is not taxable in the hands of the employee , as it is done to achieve a sense of relaxation and a short break to the employees along with replenishing the strength of the employees to carry on their work.

-The expenditure by the employer on his management staff by taking them to a restaurant for meal and alcohol is a fringe benefit but the alcohol cannot be considered as non taxable in the hands of management staff and only meal can be considered as non taxable fringe benefit.

-QANTAS club membership given to all employees who fly abroad and can use the lounges at the Qantas airport is an exempted fringe benefit as per the FBT act.

-The taxi fair paid to the employee is an exempted fringe benefit as the employee only stops by tyhe mcdonalds on the way while going to work clearly suggests that there is only a minor private use of such benefit and hence this expense is Exempted fringe benefit.