TAX ASSIGNMENT

Tax Assignment

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Name of Institution

Tax Assignment

Question 1

A fringe benefit is any benefit one offer to an employee or to the affiliate of an employee (such as their partner or children) moreover to their wage or income. Some of these products could consist of (Rediff Business, 2005):

• Allowing an employee to use a work car for private purposes

• Providing employees with cheap loans

• Releasing an employee from an owed debt

• Reimbursing an expense incurred, such as school fees

• Providing accommodation

• Providing living-away-from-home allowances.

• Providing entertainment by the way of food, drink or recreation

• Providing salary package arrangement, or

• Providing goods at a lower price than they are normally sold to the public.

As an employer, if one have offered any of the above products to their workers in regards to their career, as well as others, then one could be responsible for Fringe Benefits Tax. The Fringe Benefits Tax (FBT) year ends on 31 March each year and transaction of any necessary FBT is due by 21 May. Qualified benefits that are compensated must be registered on employees' transaction summaries for the earnings year conclusion 30 May of the same year (Advance Attorneys, n.d.).

As an employer, it is their liability to figure out whether one have offered fringe benefits to their workers during the course of the FBT year, and consequently, whether one are responsible to pay FBT on those benefits. If an employee is getting certain fringe benefits of higher complete taxed value than $2,000 in an FBT year, one must review the complete taxed value to the Australia Tax Office (Adrian Raftery Wawrzyniak (Chartered Accountants), n.d.).

If one have offered any of the above products to their workers since 1 Apr 2010 one may be responsible for the transaction of FBT, so it is necessary to consider this before the end of the FBT year. It is also worth noting that the price one have in offering fringe benefits to their workers is usually a permitted earnings tax reduction, though this should always be mentioned with their economical advisor or economical advisor (The Quinn Group, 2011).

The benefit does not have to be offered by the company immediately for him to attract fringe benefit tax. Fringe benefit tax may still be applied if the benefit is offered by a third party or an affiliate of the company or by under a design with the company (Adrian Raftery Wawrzyniak (Chartered Accountants), n.d.).

The taxes of perquisites -- or fringe benefits -- offered by a company to his workers, in addition to the money wage or income paid, is topic to different treatment in different countries.

These benefits are either after tax in the arms of the workers themselves or the value of such benefits is topic to a 'fringe benefit tax' in the arms of the company. The reasoning for levying a fringe benefit tax on the company can be found in the built in difficulty in identifying the 'personal element' where there is combined pleasure of such benefits and attributing the same ...