Problem
Frank is a computer programmer. He works for a software company in Melbourne, Australia called AHI. Frank receives a salary of $100,000 per year. On his instructions, $1,500 of his salary each month is paid directly to an educational fund for his daughter. Under the terms of the fund, Frank cannot access the money except for the purposes of his daughter's education. In addition to his salary, Frank is entitled to a payment of $500 per month towards the costs of keeping up to date with his professional accreditation. He can spend the money on any selfeducation expenses, but must provide AHI with receipts of his expenditure to claim the payment. Frank always spends more than $650 on self-education expenses and always claims the full amount he is entitled to.
Frank was heavily involved in developing a new app that helped detect potentially deadly diseases in young children. The parents of one of one child whose life was saved because of the app was so grateful that they gave him an all-expenses paid holiday to Thailand for two people. The holiday was valued at $30,000 but one of the people to go on the holiday must be Frank. The donor wanted Frank to have a 'proper' holiday as he worked nights and weekends for many months to achieve the breakthrough.
Task
• Advise Frank of his assessable income consequences arising out of the above information.
• Advise AHI as to its FBT consequences arising out of the above information, including calculation of the FBT liability (if any). If required, use the gross-up factors and FBT rate for the year ending 30 June 2022.
You may assume that any of Frank's expenses would be deductible for income tax purposes.
You may also assume that any fringe benefits are Type 1 benefits.