Alan is an employee at ABC Pty Ltd (ABC). He has negotiated the following remuneration package with ABC:
Salary of $300,000;
Payment of Alan's mobile bill ($220 per month, including GST). Alan is under a two-year contract whereby he is required to pay fixed sum each month for unlimited usage odf his phone. Alan uses the phone for work-related purposes only;
Payment of Alan's children's school fees ($20,000 per year). The second fees are GST free.
ABC also provided Alan with the latest mobile phone handset, which cost $2,000.
At the end of the year, ABC hosted a dinner at a local Thai restaurant for all employees and their partners. The total cost of the dinner was $6,600 including GST.
(a) Advise ABC of its FBT consequences arising out of the above information, including calculation of any FBT liability, for the year ending in 31 March 2011.
(b) How could your answer to (a) differ if clients of ABC also attended the end- of-year dinner?