Calculate the fringe benefit tax liability


Case scenario: Paul is a Sales Manager of Chatswood Pty Ltd with a weekly salary of $1,000. He is mainly responsible for selling camera equipment in NSW. On 1 April 2015, Paul was provided with a fully maintained company car which was newly bought for $22,500 on the day. From 1 April 2015 to 31 March 2016, Paul travelled 20,000 km for private purposes and paid nothing at all during the year. He was also provided with an entertainment allowance of $2,000 per year. In addition, part of his executive package provided him with a loan of $8,000 for a year at a concessional rate of 3% per annum commencing 1 April 2015. Assume that the employer is eligible to deduct 50% of the fair value of car and entertainment benefits given to employee in order to determine taxable amount of the benefits.

REQUIRED

(a) Calculate the Fringe Benefit Tax liability for Chatswood Pty Ltd for reporting period ending 31 March 2016.

(b) Explain why a company provides benefits to its staff if it has to pay tax for providing such benefits.

 

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Taxation: Calculate the fringe benefit tax liability
Reference No:- TGS03374716

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