Question

In respect of each benefit you are required to:

• specify the category and the applicable division of the Fringe Benefits Tax Assessment Act 1986 (FBTAA);
• provide section references of the FBTAA for each part of your calculation; and
• indicate whether the benefit is a Type 1 or Type 2 benefit and state the reason.

Reasons for any exclusions must also be provided.

Your working papers must be typed using Excel or Word. The FBT return may be handwritten. An Excel worksheet has been provided to help you to set out your assignment.

World’s Best Gifts Pty Ltd (WBG) is a company resident in Australia. Its business is the sale of unusual and original giftware. In addition to providing giftware to boutique gift stores in Perth it also has salespeople who drive to rural areas to sell its giftware to shops in country areas. Its turnover is above $10 million.

It provides the following to its staff in the FBT year ended 31^st March 2020.

Parking was provided on-site to 12 staff. There were three commercial parking stations within one kilometre. One charges $15 per day but by the end of the year had increased this to $18 per day, one charges $18 per day, and one charges $10 per day. Staff paid $5 per week towards their on-site parking.

Taxi fares for the head of the IT division. She had never learned to drive. WBG paid $10,000 in taxi fares during the year. 85% of the trips were to and from work, however, she used the remaining vouchers to travel privately after hours.

An end-of-financial year party was held at a 5-star hotel. All 50 staff attended and 40 of them brought a partner. The party cost $280 per head. The business used the actual method to calculate the entertainment FB.

Notes:

The company does not qualify as a SBE.

The company has paid GST where it is liable to do so and all amounts shown are GST-inclusive.

One of Vivienne’s major clients in a regional area renowned for its beautiful resort provides her with a weekend stay which included accommodation and food, airline tickets and tickets to a concert with an international act. The cost of this package was $8,500 and Vivienne and her daughter attended. This was offered to her as she had developed a rapport with her client and sourced interesting giftware to be sold in the resort. It was always very expensive and very exclusive giftware. The client was very appreciative of the special service provided by Vivienne. WBG was aware that Vivienne and her daughter would attend this function and that it was being provided free of charge.

REQUIRED:

Complete working papers showing how you have calculated the taxable value of each benefit provided. Include in your working papers references to the FBT legislation for each benefit provided and provide reasons and explanations for any items which you exclude from the calculations. Calculate the FBT payable by World’s Best Gifts Pty Ltd.

Answer 1

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Fringe Benefits Tax Assessment Act 1986

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Fringe Benefits Tax Assessment Act 1986

No. 39, 1986 as amended

Compilation start date:                     1 January 2014

Includes amendments up to:            Act No. 124, 2013

This compilation has been split into 2 volumes

Volume 1:       sections 1–78A

Volume 2:       sections 90–167

                        Schedule

                        Endnotes

Each volume has its own contents

About this compilation

This compilation

This is a compilation of the Fringe Benefits Tax Assessment Act 1986 as in force on 1 January 2014. It includes any commenced amendment affecting the legislation to that date.

This compilation was prepared on 1 January 2014.

The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of each amended provision.

Uncommenced amendments

The effect of uncommenced amendments is not reflected in the text of the compiled law but the text of the amendments is included in the endnotes.

Application, saving and transitional provisions for provisions and amendments

If the operation of a provision or amendment is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.

Modifications

If a provision of the compiled law is affected by a modification that is in force, details are included in the endnotes.

Provisions ceasing to have effect

If a provision of the compiled law has expired or otherwise ceased to have effect in accordance with a provision of the law, details are included in the endnotes.

  

  

  

Contents

Part I—Preliminary                                                                                                              1

1............ Short title............................................................................................. 1

2............ Commencement................................................................................... 1

2A......... Application of the Criminal Code....................................................... 1

Part II—Administration                                                                                                     2

3............ General administration of Act............................................................. 2

4............ Annual report...................................................................................... 2

Part IIA—Core provisions                                                                                               3

Division 1—Working out an employer’s fringe benefits taxable amount             3

5A......... Simplified outline of this Division...................................................... 3

5B......... Working out an employer’s fringe benefits taxable amount................ 3

Division 2—Working out an employer’s aggregate fringe benefits amount       10

5C......... Aggregate fringe benefits amount..................................................... 10

Division 3—Employee’s individual fringe benefits amount                    14

5D......... Simplified outline.............................................................................. 14

5E.......... Employee’s individual fringe benefits amount.................................. 14

5F.......... Working out the employee’s share.................................................... 16

Part III—Fringe benefits                                                                                                 19

Division 1—Preliminary                                                                                            19

6............ Part not to limit generality of benefit.................................................. 19

Division 2—Car fringe benefits                                                                             20

Subdivision A—Car benefits                                                                                 20

7............ Car benefits....................................................................................... 20

8............ Exempt car benefits........................................................................... 23

Subdivision B—Taxable value of car fringe benefits                                     24

9............ Taxable value of car fringe benefits—statutory formula.................... 24

10.......... Taxable value of car fringe benefits—cost basis............................... 27

10A....... No reduction of operating cost in a log book year of tax unless log book records and odometer records are maintained.......................................................................................................... 32

10B....... No reduction of operating cost in a non‑log book year of tax unless log book records and odometer records are maintained in log book year of tax.................................................... 33

11.......... Calculation of depreciation and interest............................................. 33

12.......... Depreciated value.............................................................................. 36

13.......... Expenditure to be increased in certain circumstances........................ 37

Division 3—Debt waiver fringe benefits                                                           39

Subdivision A—Debt waiver benefits                                                                  39

14.......... Debt waiver benefits......................................................................... 39

Subdivision B—Taxable value of debt waiver fringe benefits                     39

15.......... Taxable value of debt waiver fringe benefits..................................... 39

Division 4—Loan fringe benefits                                                                          40

Subdivision A—Loan benefits                                                                               40

16.......... Loan benefits..................................................................................... 40

17.......... Exempt loan benefits......................................................................... 42

Subdivision B—Taxable value of loan fringe benefits                                   44

18.......... Taxable value of loan fringe benefits................................................. 44

19.......... Reduction of taxable value—otherwise deductible rule..................... 45

Division 5—Expense payment fringe benefits                                               52

Subdivision A—Expense payment benefits                                                        52

20.......... Expense payment benefits................................................................. 52

20A....... Exemption—no‑private‑use declaration............................................ 52

21.......... Exempt accommodation expense payment benefits........................... 52

22.......... Exempt car expense payment benefits............................................... 53

Subdivision B—Taxable value of expense payment fringe benefits           54

22A....... Taxable value of in‑house expense payment fringe benefits.............. 54

23.......... Taxable value of external expense payment fringe benefits............... 56

24.......... Reduction of taxable value—otherwise deductible rule..................... 56

Division 6—Housing fringe benefits                                                                   67

Subdivision A—Housing benefits                                                                         67

25.......... Housing benefits............................................................................... 67

Subdivision B—Taxable value of housing fringe benefits                            67

26.......... Taxable value of non‑remote housing fringe benefits........................ 67

27.......... Determination of market value of housing right................................ 71

28.......... Indexation factor for valuation purposes—non‑remote housing....... 72

Division 7—Living‑away‑from‑home allowance fringe benefits         74

Subdivision A—Living‑away‑from‑home allowance benefits                      74

30.......... Living‑away‑from‑home allowance benefits..................................... 74

Subdivision B—Taxable value of living‑away‑from‑home allowance fringe benefits                75

31.......... Taxable value—employee maintains a home in Australia.................. 75

31A....... Taxable value—fly‑in fly‑out and drive‑in drive‑out employees....... 76

31B....... Taxable value—any other