Taxation Lesson 3 Part 2 Notes PDF

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Handy to refer when going through lessons...

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Example 2: Assume the same facts as example 1, except the car was purchased on 1 September 2020. The base value of the car will be reduced by 1/3 in the FBT year beginning 1 April 2015. 31/8/11 31/8/12 31/8/13 31/8/14 – 1/4/15 Example 3: Reduced value – 2/3 x $45000 = $30000 [Statutory rate x base value] x [days used / days year] – [Employee contribution] Statutory cost – [0.2 x $30000 x 365/365] - $600 Step 1: Taxable value - $6000 - $600 = $5400 Step 2: Gross up (Type 1) = $5400 X 2.0802 = $ 11233.08 Step 3: 47% x $11233.08 = $5279.55 Example 4: Cost Basis method Total kilometres travelled 50,000km out of which 30,000km are for business from 1 April 2019 to 31 Mar 2020. Monthly contribution by employee is $50. Operational costs: Repairs and maintenance Insurance Lease payments Registration Petrol and oil Total:

$500 $900 $6000 $1000 $3000 $11,400

BP = 30,000km / 50,000km = 60% Step 1: [Operation cost] x [1 – BP] – [Employee contribution] [$11,400 x (1-60%)] – [$50 x 12 months] [$11,400 x 40%] - $600] Step 1: Taxable value = $3960 Step 2: Gross up: $3960 x 2.0802 = $8237.59 Step 3: FBT = 47% x $8237.59 = $3871.67

10. Loan Fringe benefit 31 MAR 2019 – 5.20% per annum 31 MAR 2020 – 5.37% per annum 31 MAR 2021 – 4.80% per annum XYZ company provided a loan to its employee Rosy Whites for $10,000. But it charged 2% interest per annum. The loan was provided on 1 September 2020. Sep – 30 days Oct – 31 days Nov – 30 days Dec – 31 days Jan – 31 days Feb – 29 days Mar – 31 days Loan x [statutory rate – actual interest] x [no of days/total days of year] = $10,000 x [4.8% - 2%] x [213/366] Step 1: Taxable value = $162.95 Step 2: $162.95 x 1.8868 [Type 2] = $307.45 Step 3: 47% x $307.45 = $144.50

Step 1: 5000*(5.37%-3%) *122/365 = $39.61 Step 2: $39.61 x 1.8868 = $74.73 Step 3: 47% x $74.73 = $35.12 Debt waiver fringe benefits: If an employee was given a loan by the employer, but the employer decides to write the debt fully or partially, the debt written off is deemed as debt waiver. Debt waiver fringe benefit Example: The employer provided a 2-year loan of $4000 which is due this year. The employer decided to write it off fully. Taxable value: $4000 Gross up: 4000 x 1.8868 = 7547.20 FBT = 47% x 7547.20 = 3547.18 Example: The employer provided a 2-year loan of $4000 which is due this year. The employer waives $3000 and ask employee to pay $1000. Taxable benefit - $3000 Gross up: $3000 x 1.8868 = $5,660.4 FBT: 47% x 5,660.4 = 2,660.39...