Principles of Taxation Law
Principles of Taxation Law 2013
Answers to Questions
CHAPTER 7 – FRINGE BENEFITS TAX
Question
7.1
Determine whether the following benefits are fringe benefits or exempt fringe benefits and, where applicable, the relevant category of fringe benefit. Provide reasons for your answer:
(a)
Payment to employee for the estimated cost of the employee’s home phone bill as the employee sometimes has to use the home phone for work purposes.
(b)
Provision of accommodation at the family home to a child who is over 21 and works in the family business.
(c)
Payment of employee’s superannuation contribution by the employer to a complying superannuation fund.
(d)
Loan by Company X to one of its directors, Rupert, who is also a shareholder in the company.
The company’s rules do not permit loans to directors.
(e)
Payment of taxi fare by employer for employee to travel home after working late.
(f)
Flowers send to a sick employee. The flowers cost $75.
(g)
Provision of car for an employee’s private use, including payment of all fuel costs by the employer. (h)
Provision of sandwiches at a lunchtime seminar held at the employer’s premises.
(i)
Provision of an all-expenses-paid holiday to an employee who has had to work every weekend for the last six months.
(j)
Provision of two laptop computers to an employee who regularly attends clients’ premises.
Answer
(a) Not a fringe benefit. It is an allowance as the employee is paid a pre-determined amount for the expense: see [7.80].
(b) Issue is whether it is provided “in respect of employment” or because of the family relationship. Need to investigate further such as finding out whether the child is otherwise properly remunerated for their work in the family business: see [7.70].
(c) Not a fringe benefit. Excluded from the definition of “fringe benefit”: see [7.80].
(d) Not a fringe benefit. Loan provided due to the shareholder relationship ∴ not “in respect of
Answers to Questions
CHAPTER 7 – FRINGE BENEFITS TAX
Question
7.1
Determine whether the following benefits are fringe benefits or exempt fringe benefits and, where applicable, the relevant category of fringe benefit. Provide reasons for your answer:
(a)
Payment to employee for the estimated cost of the employee’s home phone bill as the employee sometimes has to use the home phone for work purposes.
(b)
Provision of accommodation at the family home to a child who is over 21 and works in the family business.
(c)
Payment of employee’s superannuation contribution by the employer to a complying superannuation fund.
(d)
Loan by Company X to one of its directors, Rupert, who is also a shareholder in the company.
The company’s rules do not permit loans to directors.
(e)
Payment of taxi fare by employer for employee to travel home after working late.
(f)
Flowers send to a sick employee. The flowers cost $75.
(g)
Provision of car for an employee’s private use, including payment of all fuel costs by the employer. (h)
Provision of sandwiches at a lunchtime seminar held at the employer’s premises.
(i)
Provision of an all-expenses-paid holiday to an employee who has had to work every weekend for the last six months.
(j)
Provision of two laptop computers to an employee who regularly attends clients’ premises.
Answer
(a) Not a fringe benefit. It is an allowance as the employee is paid a pre-determined amount for the expense: see [7.80].
(b) Issue is whether it is provided “in respect of employment” or because of the family relationship. Need to investigate further such as finding out whether the child is otherwise properly remunerated for their work in the family business: see [7.70].
(c) Not a fringe benefit. Excluded from the definition of “fringe benefit”: see [7.80].
(d) Not a fringe benefit. Loan provided due to the shareholder relationship ∴ not “in respect of