Question

Perisher Pty Ltd (Perisher) is a Ski equipment manufacturer that operates around Mt Hotham in Victoria. On 1 May 2019, Perisher provided Nikita (one of its employees) with a car as Nikita does a lot of travelling for work purposes. However, Nikita’s usage of the car is not restricted to work only. Perisher purchased the car on that date for $44,000 (including GST) plus $2,000 (including GST) dealer delivery charges.

For the period of 1 May 2019 to 31 March 2020, Nikita travelled 12,000 kilometers in the car and incurred expenses of $770 on minor repairs that have been reimbursed by Perisher. The car was not used for 10 days when Nikita was interstate and was parked at the airport and for another five days when the car was scheduled for annual repairs.

Calculate the Fringe Benefits Tax Liability for Perisher. Weighting

Identification of material facts (issues) regarding fringe benefits provided to Nikita 1%

Identification and analysis of legal issues / legal question and relevant taxation law in regards to fringe benefits (e.g. FBTAA 1986). 1%

Thorough application of tax law (e.g. ITAA 1936 and ITAA 1997) to material facts in Perisher's case. 1%

Accurate conclusion of the FBT calculation. 5%

Correct information and taxation law have been used and properly cited. A detailed analysis has been performed. 2%

Answer 1

Fringe benefit tax is paid by the employer in respect of the additional benefits that are provided by the employer to its employee.

Calculation of Fringe Benefits tax:

Tax = Taxable amount * 30%

= $6,892.46 * 30%

= 2,067.738