Taxation Law Under FBT Act 1986 Free Samples - Myassignmenthelp.Com

Question: Discuss about the Taxation Law Under FBT Act 1986. Answer: Application Car FBT Determination It is stated in taxation rulings of MT 2027 private use under sub-section 136 (1) that any kind of use by the employees that is not for the purpose of generating assessable income will be considered as Private Use. Sub-section 136 (1) includes valuation method of operating cost of the business journey of the cars that is not associated with the private use. It is defined under Paragraph 3 of the Miscellaneous Taxation Ruling that in order to determine the operating cost of the cars, it is required to write down the kilometer travelled by the car for the personal use of the employees in a particular logbook or any kind of similar documents (Lowe, 2014). It can be seen in the provided case study that Charlie travelled a total of 50000 kilometer for his work purpose. In order to determine the fringe benefit of the car used by Charlie, there will be application of operational cost valuation method as per Sub-section 136 (1) of the Miscellaneous Taxation Rulings of 2027 (Lignier Evans, 2 012). There is a criticality in determining the business and private use. Thus, it is needed to determine whether the employee uses the car or the associates for the generation of the employees assessable income (Evans Kerr, 2012). In this situation, as per Sub section 136 (1), this process includes the use of the car by the employee in order to generate assessable income or to perform the business activities in order to generate the assessable income of the business organization (Mountain Szuster, 2014). This process also includes the use of the car by the employee that the employer has provided to him in order to carry on the business activities and this is eligible under Fringe Benefit Tax. In addition, the use of the car by the associate of the employee and is carried out by the employee will also be considered for the use of business purpose. As per the provided scenario, it can be seen that Charlie used the car provided by his employer in order to carry on the business activities. In this situation, it needs to be mentioned that Charlie used the car for the generation of assessable income of both him and the company.Thus, this is applicable for Fringe Benefit Tax (Evans, Lignier Tran-Nam, 2013). The main aim of this report is to determine the private and business use of the car for the generation of assessable income under the income tax ruling and it is also needed to determine that whether car related expenses will be subject to deduction under section 51 of the Income Tax Assessment Act 1997 (Braithwaite, 2017). As per various evidences of the case study, it can be seen that all the expenses of Charlie on the use of the car is related with employment and thus, it is allowable for deduction for income tax. In order to determine the difference between the Fringe Benefit Tax for private use and employment use, it is needed to determine that whether the car expenditures by Charlie for the car will be considered as allowable deduction or not under income tax act (O'Connell, Martin Chia, 2013). In consideration with the provided case study of Charlie and Shiny Homes, the principles and guidelines of Miscellaneous Taxation Rulings of 2027 are most relevant under Income Tax. In this situation, it needs to be mentioned that as per the rulings of Sub-division F of Division 3, the incurred car expenses of Charlie and Shiny Homes is subject to income tax deduction. The Taxation rulings of IT 112 and the verdict in the case of Lunney and Hayley v FCT (1958) state that the travel between the workplace and the home of the employees will be considered as ordinary private travel (Cornish Lock, 2015). For the generation of assessable income, travelling to work is necessary pre-requisite and it is essential for earning of income. For this reason, the kilometer travelled by Charlie from his home to the workplace will be considered as private travel and the various course of employment will not change the course of the result. Hence, the workplace and employment is essential for this purpose. As per the verdict in Newsom v Robertson (1952) 2 All ER 728; (1952), the barristers cost while travelling from home to office would be considered as office expenses (Samuel, 2013). As per the courts verdict, the travelling of the barrister from home to chamber or to other courts would not be considered as expenses. Employment Duties of an Itinerant Nature For a long period, it has been acknowledged in taxation that the travel of the employees from home to workplace needs to be considered as business travel as it is inherently itinerant. As per the verdict in Simon in Taylor v Provan (1975) AC 194, travel of Charlie needs to be considered as travel expenses as it is one of the major fundamental parts of his job. Moreover, as per the job requirement, Charlie has to travel to different places in order to discharge his employment duties (Mathieson, 2016). The ruling of FBT Act 1986 states that Charlie was using the car partly for his business and partly for his private purpose. Different incurred cost of Charlie on his cars is petrol, repairs, insurance, maintenance and registration. Thus, for the purpose of FBT deduction, Charlie is eligible to claim the business related portion of his car expenses like petrol and repairs as it is used to generate assessable income (O'Connell, Martin Chia, 2013). Fringe Benefit Tax for Car Parking Car parking fringe benefit can be applied in case the employee gets car parking facility from the employer and the following factors are satisfied: The employee parks the car in the premise that is owned or leased by the employer or the provider of the car. The employee parks the car for more than four hours. Employer owns the car under the control of the employees. The car is giver for the employment of the employee. For a minimum of one day, the employee uses the car to go from home to office and office to home. The employee parks the car in a commercial parking station for a charge or fee and the place is within one kilometer of the premise radius. Based on the above discussion, it needs to be mentioned that the car of Charlie was parked in a secure parking station for which he gets $200 each week from Shiny Homes. It can be seen that was parked in Charlies garage that is under the control of the provider. In addition, the car was given to Charlie for employment purpose and he used the car for home to work and work to home for daily basis. For all these reasons, Charlie is eligible to claim the Fringe Benefits and Shiny Homes is eligible to claim deduction for car parking fees under on the behalf of the employee (Hodgson Pearce, 2015). Fringe Benefit Tax on Accommodation As per Fringe Benefit Tax Act 1986, there are certain forms of entertainment under the provision of entertainment that are in the form of drink or recession, travel or accommodation with entertainment and others (Jeremenko, 2014). As per the provided case, Charlie was unable to use the car for two weeks as he had a minor accident. This happened prior to Charlies wedding and the company decided to hire the car for allowing him to go for honeymoon. In addition, Shiny Home paid for the accommodation of Charlies honeymoon. This is related with the fringe benefits tax and occurs tax liability for the provision of entertainment. Thus, based on the above discussion, it can be said that Shiny Homes is eligible to claim deduction and Charlie has to show this allowance in his tax return as income. Charlie and Shiny Homes Fringe Benefit Tax Consequences The tax regulation of TR 94/25 is applicable for the employer and the employer is liable under section 5 of the Fringe Benefit Tax Act 1986. Thus, under subsection 51 (1) of the Income Tax Assessment Act 1936, the employer is eligible for claiming fringe benefits tax. In this regard, subsection 51 (1) is concerned with the fringe benefits installment and timings. As per TR 94/25, fringe benefits are incurred for the gaining of assessable income and it is subject to tax deduction under subsection 51 (1) of the ITAA (Tang Wan, 2015). The Fringe Benefits tax liability for Shiny Homes generates under the commonwealth legislation. As per section 5 of the Fringe Benefit Tax Act 1986, based on the fringe benefits taxable sums, the taxes are generally imposed. According to the verdict of Tubemakers of Australia Ltd v. FC of T93, Fringe Benefits Taxable sums includes various fringe benefits provided by Shiny Homes to Charlie (Barnett Harder, 2014). Thus, it can be seen that Shiny Homes has incurred different expenses like honeymoon accommodation, cost to hire the car and others in order to generate assessable income. Hence, as per subsection 51 (1) of the ITAA 1997, all the expenses incurred by Shiny Homes is for the purpose to generate the assessable income and for this reason, Shiny Home is eligible to claim allowable deduction for expenses (Martin, 2015). Conclusion Based on the above discussion, it can be concluded that all the fringe benefits related events are taxable under FBT Act 1986. 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