28FEB ( Final) Homework - Fringe Benefits TAX PDF

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Individual Assignment on Fringe Benefit Tax...

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Nur Hidayah Amir (32738829) HOME WORK A car purchased on 1 April 2014 for $38,000 is used by an employee for private purpose only for the year ended 31 March 2017. The employee travelled 26,500km during the year and contributed $2600 to the employer. Assume the employer can claim GST input tax. a) Determine the taxable value using statutory cost method and the FBT liability. S9 (1) – Statutory formula; where one or more car fringe benefits in relation to an employer in relation to a year of tax relate to a particular car held by a particular person, the taxable value of that fringe benefit, or the aggregate of the taxable values of those fringe benefits, as the case may be, in relation to that year of tax. S9 (2) (a) – Base value of the car: $38,000 No. of days : 365/365 S9 (2) (e) – Recipient payment : $2,600 Statutory formula: Taxable value =

[

0.2× $ 38,000 ×

]

365 − $ 2,600=$ 7,600 365

Nur Hidayah Amir (32738829) b) Determine the period where the value will change and the FBT tax liability. Assume the following costs were available for the car. Annual Registration and insurance - $1,250 Repairs

- $500

Maintenance - $1,780 Fuel - $4,500 Deemed depreciation:? Deemed interest:? S11 (1A) – the amount of depreciation that is deemed to have incurred by a person in respect of a car in respect of the period during a year of tax while the car was held by the person. DEP ×

Deemed depreciation =

395 DHP =DEP × =1.0822 DCO 365

S11 (1) – the amount of depreciation that is deemed to have been incurred by a person in respect of a car in respect of a year of tax. Amount of depreciation =

ABC $ 38,000 × 1.0822 × 395 =$ 44,503.62 = 365 D

S11 (1B) – the amount of interest that is deemed to have been incurred by a person in respect of a car in respect of the period during a year of tax while the car was held by the person. Deemed interest =

DHP

395

∫ × DCO =∫ × 365 =1.0822

S11 (2) – the amount of interest that is deemed to have been incurred by a person in respect of a car in respect of a year of tax. Amount of depreciation =

Period =

[

ABC $ 38,000 × B ×395 = =2.85 % D 365

0.0285× $ 38,000 ×

]

D − $ 44,503.62=16.23 days 365

Nur Hidayah Amir (32738829) c) Determine the taxable value and FBT liability for the year ended 31 March 2017 using operating cost method. Between part (a) and (c), which will you choose and why?

S10 (1) – An employer may, in relation to a particular car, elect that this section apply in relation to all the car fringe benefits in relation to the employer in relation to a year of tax that relate to that car. S10 (2) – the taxable value, or the aggregate of the taxable values, as the case requires, of the car fringe benefits in relation to the employer in relation to the year of tax that relate to the car while it was held by a particular person during a particular period in the year of tax. Taxable value = (c ×(100 %−BP))−R R = (c ×(100 %−BP)) = ($ 38,000× (100 %−$ 2,600)) = $950,000 I will (a), the car is taken to be available to the employee on particular days whether she actually uses it, or garaged at or near her place of residence – S7 (1) and S7 (2)

d) What documentary evidence must be kept for operating cost method? S10A – No reduction of operating cost in a log book year of tax unless log book records and odometer records are maintained....