Subject Code & Title : TAXA3004 Special Topics Of In Australian Tax Law
Assessment Type : Assignment
WORD LIMIT: Suggested 500 words MAXIMUM for small explanations which are required.
TAXA3004 Special Topics Of In Australian Tax Law Assignment – Australia.
General Instructions :
The following information is provided for you to complete the Fringe Benefits Tax (FBT) Return assignment as required in the Unit Outline.
The assignment is both theory and calculations and all workings must be included.
You are required to complete the FBT calculations in respect of the various benefits provided on your supporting working papers. Once you have completed the calculations,you are required to complete the FBT return based on the figures in your supporting work papers.
The purpose of this assignment is to provide you with an opportunity to practically apply your knowledge of the taxation law and to expose you to the compliance process through the completion of a FBT Return. A copy of the current year FBT form has been provided with the assignment.
In respect of each benefit you are required to:
1.specify the category and the applicable division of the Fringe Benefits Tax Assessment Act 1986 (FBTAA);
2. provide section references of the FBTAA for each part of your calculation; and
3. 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 hand written. 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 gift ware. In addition to providing gift ware to boutique gift stores in Perth it also has salespeople who drive to rural areas to sell its gift ware 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.
Vivienne – the chief salesperson and chief buyer
a) A Mercedes GLC43 motor vehicle purchased on 1 March 2019. It cost $130,000 with Stamp Duty of $8,125. At Vivienne’s request extra-wide sports tyres were fitted. These cost $6,200. Insurance and registration paid at purchase cost $3,560. Fuel was $10,200 for the current FBT year. Registration and insurance paid on 1 March 2020 was $3,800. A correctly maintained logbook showed 85% work-related use and 15% private use. The car was garaged at WBG’s premises while she was on a work-related trip – see below.
b) Mobile phone and home Internet costs were $3,400 of which work-related use was 90%. It was provided via WBG’s provider.
c) A new laptop which cost $4,700 was provided on 10 November 2019. It was used for work-related purposes only.
d) Air-line tickets, hotel accommodation and transfers to several Gift Shows in Asia and the USA. The total cost was $25,000. The trip was for three weeks and she attended gift shows on all weekdays, using the weekends to transfer to another show in a different city or country.
e) A Clothing Allowance of $10,000. She was required to look professional for all meetings with clients.
Michael – a salesman who mainly serviced shops in Perth.
a) A BMW sedan which was leased at a cost of $800 per month. It cost $95,000. His work related use was 65% based on his logbook. Fuel totalled $8,100 insurance and registration were $2,700 paid on 1 April 2019. Michael did some minor damage to the car and paid $1,200 to have it repaired. He took all of November 2019 and December 2019 on a combination of Annual and Long Service Leave. He went overseas and left the car at the employer’s premises.
b) A diamond bracelet with a retail value of $10,800 he gave as a gift to his wife for her 50 th birthday. WBG was able to buy it from another business at a reduced price of $7,500. Michael was required to pay $5,000.
c) Christmas and birthday gifts, he bought for family and friends. He paid $6,800 for gifts which WBG would have sold to its customers for $10,000. In turn, the customers would have sold them at retail for $15,000. He had salary sacrificed this amount.
d) Membership of the Salespeople Association. It cost Michael $400 all of which was re-imbursed by WBG.
Benefits provided to various other staff members or for staff generally Ten gift vouchers worth $300 each for staff who had significant work anniversaries in the business.
It was discovered that one employee had been overpaid $2,000. It was agreed that she would repay this when she eventually left the business. It would be taken out of any payments for unused annual and long service leave. The deficiency came to light on 1 April 2019.
New garden furniture which was placed in an outdoor area which staff could use at lunch time or after work for drinks. It cost $1,200.
TAXA3004 Special Topics Of In Australian Tax Law Assignment – Australia.
WBG provided fresh fruit for the staff three times a week. This cost $2,500 for the year.
End-of-month drinks were provided and this cost $4,600 for the year.
Maddison, one of the staff was the longest serving employee. She enjoyed the ballet and as a birthday gift on her 60 th birthday WBG bought her two season tickets. This cost WBG $1,200.
WBG re-paid the costs of a Masters in Professional Accounting for one of the staff as it considered that the staff member would be more productive and useful to the business with the skills and knowledge gained from the degree. Post-graduate fees for the current year totalled $8,900 and books cost $1,400.
Low-interest loans to staff. Four staff members took advantage of this. Each borrowed $15,000 from the business. It charged 2.00% p.a. interest. Two staff members used the funds for income-producing purposes, and one used it to buy a car for his daughter. The fourth member did not want to borrow the money personally, but the business allowed the staff member’s spouse to borrow the money to pay for dividend-producing shares. All loans had been provided on 1 April 2019.
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 air line 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 gift ware to be sold in the resort. It was always very expensive and very exclusive gift ware. 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.
TAXA3004 Special Topics Of In Australian Tax Law Assignment – Australia.
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.
Complete a FBT Return based on the information provided. You should complete all the relevant sections of the FBT return. You can create the information for any sections required in FBT Return where the information is not specified or calculated from the information provided above (such as TFN, ABN, etc.).
You can assume that WBG will make any elections necessary to pay the minimum FBT legally possible.