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Cost incurred on communication of $1,000 by GHTY will be considered for the fringe benefit tax since the cost is borne by GHTY for its employee Lisa. While on the other hand $3000 is paid to Lisa for her childcare provider named “Happy Kidz”. The cost is assessable under the Fringe benefit tax since this cost is borne by the company on each quarter of the financial year. GHTY also incurs the cost of protection gears such as a pair of $250 for capped boots, 150 for lead lined and a pair of $350 for safety goggles. Therefore, at the time of computation of Fringe benefit tax these expenses will form a part of the remuneration pack.
According to the Bureau of Labour Statistics in respect of Australian taxation employee benefits forms the part of indirect expenses incurred by the organisation[1]. The Australian taxation laws provide that the accounting benefits is a valuable consideration, it does takes into consideration the reasons behind an organisation to offer benefits to its employees. These benefits are mandated by regulation or market or market forces and that create an employee prerogative right or expectations.
FBT Liability of GHTY |
|
|
Particulars |
| Amount |
Communication cost | 1000 X 12 | $12,000 |
Childcare cost | 3000 X 4 | $12,000 |
Safety cost |
|
|
Capped boots |
| $250 |
Apron |
| $150 |
Safety Goggles |
| $350 |
Total taxable value |
| $24,750 |
FBT Taxable amount |
| $12,746.25 |
Tax Payable |
| $6,181.931 |
Computation of fringe benefit tax of Lani |
|
Particulars | Amount |
Gross Salary | $65,000 |
Allowance non-separable | $12,000 |
Child care cost | $12,000 |
Tools of Trade & Protective Clothing | $750 |
Less: Loan | $19,000 |
Less Interest on loan | $682.5 |
Total taxable value | $70,067.5 |
Fringe benefit taxable amount | $136,053.4 |
Tax Payable | $65,985.9 |
Michal started the business of wine in the year 2011 and made their first batch of wine to sell them in local population. The tax consequences of selling wine are as follows;
Inherent tax: It is worth mentioning that inland revenues has made it understandable that the value of wine for inheritance tax will not be considered at their cost price. Under section of 160 of IHTA 1984 the Inherent tax will be determined as per the value of the property[2]. Therefore, it is noteworthy to denote that the value for inheritance will be valued in accordance with the open market.
Capital gains tax: Under section 44 (1) of the Capital gains tax act 1992 defines the wasting assets at the time of acquisition should not exceed the period of 50 years[3]. Hence, the revenues generated from the bottled wine purchased are considered in the computation of capital gains tax. The inland revenues will be taxed for Michael.
2. Ordinary income is usually characterised as income other than long-term capital gain. Ordinary income usually consists of the income arising out of the wages, salaries, tips and other types income. Ordinary income in respect to the capital gains is the sale of capital assets[4]. In contrast to the give case, Michael if considers the sales considerations offered to him by the large Australian wine maker would not be considered as the ordinary income since he has conducted the business operation. By contrast, Michal may sell of the land and the income would be considered for capital asset. Details of purchase of property | Amount |
Financial year of purchase | 2008 |
Cost of inflation for the acquisition year | 551 |
Purchase price of property | 30,00,000 |
Add: Expenses relating to acquisition | 0 |
Total cost of acquisition of property | 30,00,000 |
Details of sales of property |
|
Financial year of Sale | 2,015 |
Cost inflation index for the year of sale | 1081 |
Full value consideration received for sale | 420,00,000 |
Less: Expenses incurred on transfer | 0 |
Net value of consideration | 420,00,000 |
Long-term capital gains | 361,14,338 |
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