Question

Perisher Pty Ltd (Perisher) is a Ski equipment manufacturer that operates around Mt Hotham in Victoria. On 1 May 2019, Perisher provided Nikita (one of its employees) with a car as Nikita does a lot of travelling for work purposes. However, Nikita’s usage of the car is not restricted to work only. Perisher purchased the car on that date for $44,000 (including GST) plus $2,000 (including GST) dealer delivery charges. For the period of 1 May 2019 to 31 March 2020, Nikita travelled 12,000 kilometers in the car and incurred expenses of $770 on minor repairs that have been reimbursed by Perisher. The car was not used for 10 days when Nikita was interstate and was parked at the airport and for another five days when the car was scheduled for annual repairs. Calculate the Fringe Benefits Tax Liability for Perisher, please have a look at the matrix below on how to answer the question

QUESTION 1: Calculate the FBT liability for Perisher Pty Ltd

Identification of material facts (issues) regarding fringe benefits provided to Nikita

Identification and analysis of legal issues / legal question and relevant taxation law in regards to fringe benefits (e.g. FBTAA 1986).

Thorough application of tax law (e.g. ITAA 1936 and ITAA 1997) to material facts in Perisher’s case.

Accurate conclusion of the FBT calculation.

Correct information and taxation law have been used and properly cited. A detailed analysis has been performed.

Answer 1

Formula is;

Taxable value = (A x B x C) - E

                                   D

Where:

A = the base value

B = statutory percentage

C = days for available for private use.

D = the number of days in the FBT year

E = employee contribution

Base value is the original price + delivery charges

So base value = 44,000 + 2,000 = 46,000

A flat statutory rate of 47% applies ending 31st march 2019

The car is treated as available for private use is the car is not at employer's premises, again car is considered to be available for private use where it is in the workshop for routine servicing or maintenance.

So both when the car was parked at the airport and when it was at repair shop is considered as available for private use.

Available for private use 10 + 5 = 15 days

The number of days in the FBT year are total days from 1st may 2019 - 31st march 2020 = 335 days

Employee's contribution = 770

Taxable value = (46,000 x 47% x15 / 335) - 770 = 198.05