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LAWCOMM 403 long notes.docx
LAWCOMM_403_long_notes.docx
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LAWCOMM 403 long notes.docx-CONTENTS Tips ...........
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
LAWCOMM 403 long notes.docx-CONTENT...
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
Page 65
o
“To the extent to which a benefit that an employer provides to an employee in connecon with their
employment is assessable income, the benefit is not a fringe benefit.” (
secon CX 4
)
o
There are two kinds of fringe benefits – classified and unclassified (
secon CX 2
)
Exclusion of fringe benefits (
secon CX 3
)
o
“A fringe benefit is excluded income of the employee.”
Fringe benefits and exempt income (
secon CX 5
)
o
Exempt income does not count as a fringe benefit
Classified benefits (
secons CX 6 to CX 18
)
o
Classified benefits are benefits in respect of which there are parcular rules – they are classes of benefits
which are common, economically significant and troublesome from a tax point of view
o
Classified benefits include:
company cars: secon CX 6;
cheap loans: secon CX 10;
employers’ contribuons to superannuaon schemes: secon CX 13;
employers’ contribuons to sickness, accident and death benefit funds: secon CX 14;
employers’ contribuons to life and health insurance: secon CX 16.
Exclusions and limitaons (
secons CX 19 to CX 33
)
o
Exclusions and limitaons from FBT include:
accommodaon and travel provided to an employee to enable her to perform her employment
dues: secon CX 20;
For example, if your company send you overseas for a conference, and provides for you to
stay at a hotel
benefits provided on the employer’s premises (other than travel, accommodaon, and clothing):
secon CX 23;
For example, car parking
This is quite tax effecve as the employer gets a deducon for renng the parking space, and
doesn’t have to pay FBT
assistance with preparaon of tax return: secon CX 27;
accommodaon provided in connecon with employment: secon CX 28
For example, your employer requires you to stay somewhere for work purposes
some entertainment: secon CX 29; and
The rules relang to entertainment are complicated – somemes, entertainment is
deducble for the employer and sll gives rise to FBT, or does not give rise to FBT, or is only
50% deducble
The rules are complicated because “entertainment” is a big category – therefore, it is highly
suscepble to tax avoidance as some entertainment expenditure is business-oriented and
others are just personal expenditure for which the employer is trying to get a deducon
disncve work clothing: secon CX 30
Normal clothing allowance is subject to FBT
However, there is no FBT for disncve work clothing (e.g. McDonald’s uniform)
Unclassified benefits (
secon CX 37
)
o
“Unclassified benefit means a fringe benefit that arises if an employer provides an employee with a benefit in
connecon with their employment that is –
not a benefit referred to in any of secons CX 6 to CX 16; and
not a benefit excluded under this subpart.”
o
These are benefits that do not have parcular rules relang to them – they are sll taxable under subpart RD
Other common fringe benefits include cheap goods, cheap services, telephone and child care
Some fringe benefits are chargeable neither to income tax nor to FBT. This is so, in parcular, of some
benefits provided on the employer’s premises. Examples include parking; child care; canteen (light
meals only).
RATES AT WHICH FBT IS CHARGED
The purpose of this rate is to achieve neutrality with income tax
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