Question

Jamie is a real estate agent working for ‘Houses R Us’ real estate. As part of his employment contract, Jamie receives a base salary of $50,000 per annum plus 10% of the agency’s commission on sold properties where he has had a direct connection with the sale. He is also provided with a car, a Toyota Kluger costing $48,000. He is not required to contribute to the running costs of the car which total $13,500 per year and is allowed to use the car outside of work hours and on weekends.

Jamie's salary package also includes a laptop which cost $2,300 and a mobile phone costing $1,200 per year. His employer also reimburses his annual professional subscription of $550 and provides him with an entertainment allowance of $2,000 per year.

Jamie was also lucky enough to achieve the highest sales for the previous six month period and was rewarded with a high tech home entertainment system worth $4,800.

‘Houses R Us’ also offer their staff loans of up to $100,000 towards purchasing their own house at a rate of 4% per annum. Jamie is considering taking up this offer to purchase his first home.

Required
Advise Jamie and ‘Houses R Us’ of the taxation and FBT consequences of these transactions. You are not required to calculate any FBT liability. should be presented like essay not more than 1500 words citing relevant cases and laws

In assessing your assignment the marker will expect you to:

present an essay that is readable and coherent;

use appropriate language, correct spelling and grammar;

identify and analyse relevant issues;

explain and apply relevant cases, rulings and legislation;

reach a sound and well-reasoned conclusion;

use appropriate referencing; and

demonstrate time management skills

Answer 1

If a company provides jamie housing loan = $100000

Suppose jamie bought house = $500000

CALCULATIONS FOR HOME LOAN TAXATION:-

Home value = $500000

Interest rate = 4%

Interest amount = $4000

Tax rate = 28%, so that tax = $140000

Real estate tax = 5%, so that it is = $25000

Total tax =$140000 +$25000

= $165000

standard deduction = $5700

itemized deduction = $30833

Total deduction = $36536

pending tax liability = $165000 - $36536

=$128464

Jamia can reduce expense from his tax amount if he has some other expenses related with home robbery and stealing in home .

Now he has $4000

interest $128464

HENCE TAXLIABILITY

CALCULATIONS FOR OWN HOUSE:-

House value =$500000

Real estate tax 5%=$25000

= $500000 *5/100

= $500000*0.05

= $25000

tax rate 28% = $14000

= $500000 * 28/100

=$500000*0.28

= $14000

tax rate = $165000

Deduction on own house worth $500000 are50%

deductions = $500000 *50/100

=$250000

tax after deductions = $165000-$250000

= -$85000

tax is totally coverup by deductions

I would suggest jamie to buy his own house rather than purchase house loan from his organisation . It is more beneficial to purchase own house for tax benefits.