Taxation Law

Taxation Law

Introduction

Assignment is divided into two sections one regarding the analysis of fringe benefits and what kinds of fringe benefits are exempted and second part analyses two methods of capital gains tax: indexation and discount methods. Fringe benefits tax is a tax that has to be paid by the employers in return of the benefits received by them. This tax has to be paid together with the income tax paid by the employers. Another type of tax discussed in this assignment is capital gains tax. This tax is paid on any capital gain or loss made by the owner. This tax is not a separate tax but it is a part of the income tax. The two methods discussed are capital indexation method and discount method. The assignment answer questions about whether the fringe benefits in different situations are exempted or not exempted according to taxation laws of Australia. The situations analysed includes gift vouchers given to employees on Christmas or any other event, loan taken by employees for personal work and; what happens in case of providing legal services on a 60% discount and also giving television.

Discussion

Answer 1

Fringe benefits Tax are a separate form of tax, paid along with income tax. Fringe benefit tax is paid by employees in return of the benefits received by employees. These benefits include loans with low interest rates, gifts & vouchers, car finances, house building assistance and entertainment benefits (Cch, 2010/2011,pp.25-50). Many countries have different ways of taking up the fringe benefit tax. In Australia there is a different approach in taking up the fringe benefit, certain benefits are excluded from the employee benefits and included in a separate employer benefit tax. A fringe benefit tax is paid over a year starting from 1st April to 30th March and help in accessing the amount paid over a year. This tax is paid in instalments on the basis of previous year assessment and it is paid in quarterly instalments. Fringe benefits are dived into categories of valuation and exemption. Each category of benefit has its own rules to decide the valuation, like in case of car used for either office work or for personal reasons also includes car parking in its valuation (Thomson, 2009).The valuation of benefits is done to value the cost at which employees have availed the benefits which is lower than the market price. The deductible rule is done in order to reduce the amount of tax that would be deducted from the employee's salary. There are many benefits that are not included in fringe benefits, these are: expenses of food and drink, benefits during travelling, employer's car used by its employees, leasing facilities, medical requirements in an emergency, security of employees or his family members, overseas living and utility expenses like fuel, electricity or other expenses.

Now here are some of the fringe benefits along with their exemptions. First is the car fringe benefit which is funded to the employee for either private use or office ...