Question

PART A   

Required: Advise E Pty Ltd regarding the Fringe Benefits Tax implications of the facts below. You are not required to calculate the actual FBT liability.

E Pty Ltd is an engineering firm that employs Naomi, who is entitled to a salary of $150,000. She reaches a salary sacrifice arrangement with E Pty Ltd where, in exchange for giving up part of her salary, E Pty Ltd will pay for:

• A laptop (that she can keep) that she intends to mostly use for work.
• Extra superannuation contributions.
• The interest expenses on her investment property loan.

PART B

Required: Advise Newtech as to the GST implications for the following transactions:

An IT development firm, Newtech, which is registered for GST, undertakes the following transactions for the GST period (where GST applies, prices are GST inclusive):

• Purchases of fresh fruit from a major supermarket for the staff room: $1000.
• Purchase of a new laptop from a major department store: $2000.
• Payment of staff salaries: $300,000.
• Payment of water utilities bill: $500.
• Sales of services: $600,000.

Answer 1

PART A

• Fringe benefits are perks and additions to normal compensation that companies give their employees, such as life insurance, tuition assistance, or employee discounts.
• If a fringe benefit is transferred as cash, such as a bonus or reimbursement for travel or other expenses, they are likely to be subject to income tax.
• Benefits received in-kind, or considered de minimis are usually not subject to taxation.

PART B

In this case NEWTECH want to pay GST for purchase of goods , and collect GST for its sales .

while paying to GOVT they will get a credit for what they paid .