Question -
Charlie is an employee of Shiny Homes Pty Ltd (Shiny Homes). He is a real estate agent. Shiny Homes also operates a separate business on landscaping to 'do up' houses before they are put up for sale.
From the period 1 July 2016 to 30 June 2017 the following events took place:
In 1 September 2016, Shiny Homes provided Charlie with a 4 wheel drive sedan value at $70,000. From 1 September 2016 to 31 March 217 the car travelled 80,000 km. He parked his car in his garage in the evenings. Before he went away for his Christmas holidays, the car was sent to be serviced and he could not use his car for 2 days. He estimated that 70% of the time he used the car was for business purposes and the other 30% of the time for private use. Charlie also maintained a log book for 12 weeks and the following information was recorded:
- 50,000 km were work related
- Petrol and oil per month - $2,000
- Repairs and maintenance per month - $3,500
- Registration per annum - $240
- Insurance per annum - $960
Note: these expenses were incurred by Shine Homes.
In 1 February 2017, Charlie was involved in a minor car accident and he could not use the vehicle for 2 weeks (1st to 14th February 2017). This occurred a week before Charlie's wedding and Shine Homes decided to hire a car for that period at a cost of $1,000 to allow Charlie and his wife Deborah to go for their honeymoon trip to the Gold Coast. Shine Homes paid for their honeymoon accommodation which was worth $3,000.
During working hours Charlie parked his car at Secure Parking (an unrelated entity) and Shine Homes paid $200 per week.
Required - Advise both Charlie and Shine Homes about the fringe benefit consequences of these events. You are required to compute the taxable benefit where necessary.
You must cite the relevant case law and legislation.
Rationale - This assessment task covers topics from week 1 to 9 and has been designed to ensure that you are engaging with the subject content on a regular basis. :
This assignment has been designed to assess your ability to
- be able to identify and explain the rules of law relating to taxation law topics covered in the subject
- be able demonstrate a capacity to engage in legal research
- be able to use legal research skills to apply the law to legal problems relating to taxation so as to reach a solution
- be able to analyse legal rules so as to differentiate between possible outcomes to the legal issues arising from novel fact situations.
Students should be able to identify and apply legislation and case law to the issues identified as well as demonstrate the ability to analyse the issues fully and discuss the application of taxation principles.