Fringe Benefit tax are been paid by the employer on the certain benefits provided by him to their employees. The tax on fringe benefit is mostly applied on the non cash benefits which are provided by the company to their staff. The fringe benefit tax is different from the income tax and it would be calculated on the benefits provided. The FBT is taxable on the specified items at the rate of 47% including Medicare levy. FBT is annual tax and taxable on any benefit during the period of 1st April to 31st March.
There are certain exclusion on which no FBT is liable to pay the exclusions is: salary & wages, superannuation contribution, benefits under employee share schemes.
The FBT tax is exempt on certain benefits which are notified by the Australian government the benefits are:
- Exempt loans
- Work related expenses
- Exempt car payment benefits expense
- Minor benefits having taxable value under $300
- Tools and certain equipment expenses related to work
- Employee relocation expenses
- Remote area housing.
The FBT are been liable on the following item:
- Debt waiver
- Expense payment
- Living away from home allowance
- Airline transport
- Meal entertainment
- Tax-exempt body entertainment
- Car parking
As per the Alan case the we assume that mobile bills covered under salary packaging would be not be chargeable to FBT as such phone is used for the business purpose so it falls under the exclusion category of work related expenses and the cost of mobile phone given of $2000 would not be liable for FBT as it was related to employee employment benefit.
The expense initially the employee is liable to pay such amount and if it was paid by the employer than it will fall under the category of expense payment fringe benefits and employer ABC Pty is liable for FBT. So the children school fees of Alan were borne by the employer than such fees if liable for tax. The school fees paid by the employer were GST free so it would be liable for tax as per type 2 of FBT.
In the above case the meal was provided by the ABC Pty limited at the end of the year to their employees and partners, we are assuming that such meal was not provided during working hours or for the business or seminar purpose so such entertainment expense would be liable to FBT.
Answer to above case:
a) The ABC PTY Limited company has provided mobile phones and reimbursed the mobile bill of Alan than such expense payment would not be liable to FBT as the such expense is incurred for the use of business purpose and as per the provision any expense incurred and such benefit given are used for the business purpose than such expense are not liable for FBT.
Calculation of FBT:
Expense related payment: school fees where GST is free the FBT liability for 31st march is $20000*1.8868 = $37736
FBT liability = $ 37736*47%=17736 (round off)
Entertainment benefit provided: dinner provided of $6600 including GST calculation is provided below.
FBT taxable value= $6600*1.1 *2.0802*50%=$7551
FBT liability= 7551$*47%=$3549
Total FBT liability was $17736+$3549=$21285.
b) The answer given in case A would differ if there are less employees i.e. 5. If the employees would be less than the payment for dinner would automatically reduces which affect on the FBT amount the cost of dinner per employee would be 6600/20=$ 330 per employee so number of employee was 5 so total expense for dinner would be $1650. So FBT amount would be 1650*1.1*2.0802*50%=1888*47%= $887.
c) As per the answer given in case A above the FBT is leviable on the meals provided to their employee at the year end and if such dinner if accompanied by the clients than as per the legislation the FBT would be leviable on the part of the benefits provided to the employee and the associates or partners they are not liable to pay FBT n the remaining part of benefit provided to clients.
Computation Of Capital Gain Tax of Dave Solomon For The Year End 30 June
Total Amount (in $)
Proceeds & Cost Base Of Home Property
(claiming the main residence i.e. family home exemption as it is exempted under the definition of CGT)
@ Proceeds of Painting in the current year
Cost Base of Painting acquired in 1985 after indexation (15000*123.4/71.3)=25960.73
Proceeds of Luxury Motor Cruiser in the current year
Cost Base of Luxury Motor Cruiser acquired in 2004
Proceeds of Shares
Brokerage On Shares deduction
Stamp duty on Shares deduction
Previous Year Capital Loss Deduction
Net Capital Gain For The Current Year
@Painting acquired is not considered in the category of collectables as Dave Solomon acquired it for the value less than $500 and also before 16 December 1995.
Exceptions and exemptions:
Commonly speaking, a capital gain or capital loss on below mentioned is dis-regarded:
- a) Properties acquired before 20 September 1985
- b) Motor vehicles
- c) Reimbursement received for particular injury
- d) Selling of main residence (family home)
- e) A collectable, for example, jewelry, which is acquired for $500 or less
- f) A private used asset kept mainly for private use or pleasure for own purposes or for associates. If assesse acquired it for more than $10,000, is disregarded for only capital losses. If it is acquired for $10,000 or less, it is disregarded for both capital gains and capital losses.
Calculating out net capital gain or loss -
Once assesse finds out his/her capital gain for each CGT asset, he/she need to find out his/her net capital gain for the year.
Net capital gain = Total capital gains for the current year (including those distributed by a managed fund or trust)
(Minus) Total capital losses (including any net capital losses from previous years)
Generally, CGT is not aseparated tax. The net capital gains forms part of your assessable income in the year the CGT event occurred and is payable as part of assesses income tax assessment for the relevant income year.
Because assets are often long term assesse need to take good care of records relating to purchase, conservation and enhancements. This will help not only in finally working out the amount that is subject to Capital Gains Tax but also helps in recollecting the true base costs that has been spent.
The amount Mr. Dave has got after selling of the assets can be utilized to contribute funds to his personal superannuation fund.
Some records which are specifically needed to keepwhenever a major transaction happens include:
- a) Interest paid on related loans
- b) Receipts of purchase
- c) Records of expenses like legal fees, stamp duty etc.
- d) Receipts covering land taxes, insurance bills, rates etc.
- e) Receipts for repairs, maintenance and improvements
- f) Any market valuations
- g) Receipts for shares brokerage
Calculating out net capital gain or loss -
Once assesse has find out his/her capital loss for each CGT asset, he/she need to find out his/her net capital loss for the year.
Net capital loss = Total capital losses (including any net capital losses from previous years)
(Minus) Total capital gains for the year (including those distributed by a managed fund or trust).
Assesse cannot deduct his/her net capital loss directly from his/her other incomes, but he/she can carry it forward and deduct it from capital gains in later income years.
There is no time limit on how long one can carry forward a net capital loss.
One must apply his/her capital losses against his/her capital gains in the order in which he/she made them. They can't choose not to apply capital losses against capital gains if they have them, however, they can choose which capital gains to deduct their losses from.
Net losses arising from collectables can only be deducted from capital gains made from respective category of collectables only, and not from other capital gains.
ANON, N.D., “Capital Gains Tax on Shares and Units”, viewed on 11 January 2014.
ANON, N.D., “Capital Gains Tax on Home”, viewed on 11 January 2014.
ANON, N.D., “Capital Gains Tax Exemptions”, viewed on 11 January 2014.
ANON, N.D., “Calculating a Capital Loss”, viewed on 11 January 2014.
ANON, N.D., “Calculating and Paying Capital Gains Tax”, viewed on 11 January 2014.
ANON, N.D., “Step By Step Guide to Capital Gains Tax”, viewed on 11 January 2014.