Question

Question 2

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.

Rationale

This assessment task will assess the following learning outcomes:

be able to identify and explain the rules of law relating to taxation law topics covered in the subject.

be able demonstrate a capacity to engage in legal research.

be able to use legal research skills to apply the law to legal problems relating to taxation so as to reach a solution.

be able to analyse legal rules so as to differentiate between possible outcomes to the legal issues arising from novel fact situations.

Answer 1

SOLUTION:-

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 taxliability = 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 ect...,

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 SUGGEST JAMIE TO BUY HIS OWN HOUSE THAN PURCHASE HOUSELOAN FROM HIS ORGANIZATION . IT IS MORE BENEFICIAL TO PURCHASE OWN HOUSE FOR TAX BENEFITS.