Taxation Law

[Name of the Professor]

Taxation Law

Question 1

A: The Christmas vouchers being provided to Carry has a value of $500. According to Fringe Benefits Tax Law of Australia, benefits provided in excess of $300 will be treated as exempt fringe benefit. Although the benefit provided is a one off event as its been given for Christmas shopping purposes, yet if the value had been less than $300 then only would it have been considered as a fringe benefit. The category of fringe benefit applicable here is a Minor benefit (Australian Taxation Office for the Commonwealth of Australia, 2012). Such an event would have come under minor benefits if the amount has been less than $300.

B: Since the relocation is not related to work purposes, as it's been incurred as a consequence of the personal catastrophe being faced by the employee, the employer will have to pay for the taxes as a result. The tax rate applicable as per the law is 46.5%, as employee won't be paying any interest and will only be returning the half loan amount, so the employer will have to pay tax for the gross amount which makes up $10,000. Thus the taxes being paid as a result of this transaction will be $10,000 X 0.465 which makes up to $ 4,650. Since loan is given interest free, so no interest payment charges will be applicable here in this case (Lim, 2012). Tax expenditure will have to be bear by the employer in this case.

C: The taxable value for these fringe benefits would be calculated in the same manner as in a normal situation. Although the service being provided is paid at a 60% discount but the employer will have to pay the tax in the normal manner for providing legal services to the employee. The plasma ...