HI6028 Taxation Question 1 Solution
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, please have a look at the matrix below on how to answer the question
QUESTION 1: Calculate the FBT liability for Perisher Pty Ltd 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 1 %
fringe benefits (e.g. FBTAA 1986).
Thorough application of tax law (e.g. ITAA 1936 and ITAA 1997) to material facts in Perisher’s 1 %
Accurate conclusion of the FBT calculation. 5 %
Correct information and taxation law have been used and properly cited. A detailed analysis has 2 %
QUESTION 1 TOTAL MARKS: 10 %
The taxable value of that fringe benefit, or the aggregate of the taxable values of those fringe benefits, as the case may be, in relation to that year of tax, is the amount calculated in accordance with the formula:
1. Base value of the car = Purchase cost + Delivery charges
2. No of days during that year of tax on which the car fringe Benefits where provided by the provider = 1st May 2019 to 31st March 2020. = 304
3. Rate on the taxable value given for the fringe benefit is = 10% on the taxable value
Formula for calculation of the Taxable value
0.2 * Base value of the car * No of days during that year of tax on which the car fringe
Benefits where provided by the provider
No of days in that year of tax
=0.2 * $46000 (Note 1) * 304 (note 2)/365 – Expenses incurred by employee
Fringe benefit tax liability = Taxable value * Rate of tax
= 6892.24 *10% = 689