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Calculate the taxable value of the fringe benefit using the statutory formula

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Question - A. Calculate the taxable value of the fringe benefit using the statutory formula in the following case context: Nancy provided her employee (William) with the use of a Toyota Pajero car 216 days during the Fringe Benefit Tax year. During the period, the car travelled 12,000 km. Nancy purchased the car last year for $65,000. William contributed $2,000 towards the cost of running the car and has provided Nancy with relevant documentation.

B. Rory is a staff of a furniture manufacture company. His employer allowed him to purchase an office table for $ 1,200. The table would ordinarily be sold to customers for $1,800. Calculate the taxable value of the fringe benefit.

Answer 1 -

a) As per fringe benefit, the statutory formula of the taxation value calculation demoted several factors that help to calculate all the factors of fringe tax value.

Nancy bought the car at the base price of $65000 and she give it to her employer William after using the car for 216 days in the fringe benefit year. William provides $2000 behind car costing and give it back to nancy. Generally, a fringe benefit is calculated at the 20% rate that is considered as the private costing percentage and the FBT year counting is considered as 365 or 366 (leap year) and the overall rate is counted in dollar currency.

The base price of the car is $65000 and it covers 12,000 in 216 FBT days, and William invested $ 2000 dollars in the car in the significant tax year. According to FBT methods, the base car price is the purchase price, stamping and registration costing included in the base price. On the other hand, the number of days usage is also considered in the case of fringe calculation.

The statutory formula : [(A * B * C) / D] - E

Where, A= purchaser value or base value

B= applicable satuitory percentage ( flat 20%)

C= number of days car usage in FBT year

D= the number of days in a whole FBT year ( 365 days or leap year with 366 days)

E= investment of employer

[($65,000*20%*216) / 365] - $2000

$7693.15-$2000

$5693.150

The total value of FBT is $5693.150 in the FBT year of the car.

b) The offering price of the table is $1200

The purchased table will be considered as a domestic or in house piece of property that comes under "private fringe benefit" as it is sold to the consumer in the standard trajectory path of general business(H&R, 2021).

The specific table is obtained by Rory's employer, therefore the net taxable amount is less than the original price or lesser of the cost for the purchaser coming from the employer. The actual price of the specific table for the consumers is $1800 that is $500 more than the price obtained by the employer for selling it to Rory. The net taxable amount of the table would be the price of the table for the employer to obtain the property that is the lower value from the original payable price for a customer $500. The taxable value is reduced by $500 for the specific table sold by the employer in a lower value from the original taxable amount. As the total amount is reduced by $500 from the base price it is charged $0 as taxation amount of fringe benefits.

Answer 2 -

Part A - According to the FBT Act, the calculation of the taxable value of car Fringe benefit

Can be determined with the following formula

Total taxable value= Base Value of car X Statutory Percentage X Number of days

Use for which car is use/number of days in FBT year- contribution by employee

= ($65,000 x 216/365 x 20%)-$2000

= $7693 - $2000

=$5693

Here the car was purchased in last year for $65000. According to the section 9(2) the base value of the car includes the incidental expenses related to the purchase of the car and the purchase cost of the car. In This car is used during the FBT Year for 216 days. The statutory rate is 20%. The amount of the contribution of the Employee is $2000. So the total taxable value of car Fringe benefit is $5693.

Part B - According to the FBT Act, the calculation of the taxable value of the Fringe benefit tax can be determined with the following way;

Taxable value of the fringe benefit tax = (lowest selling price x 75%) - $1200

=$1350-$1200

=$150

Here in this case furniture is manufactured by the employer as well as sale this furniture in the ordinary market. In the ordinary market furniture sold by the employer at $1800 While the employee paid for this furniture at $1200.

According to the section 40 FBT Act provides that the fringe benefit considered if the employer provide assets to the employee at a concessional rate or at a free of cost. According to section 42 of the FBT Act the taxable value of the property affected with whether the property has been acquired by the employer or the property manufactured by the employer and the which person this property is sold. This all things are affected to the taxable value of the property fringe benefit. In the case o the product sale in the market by the employer at that time the taxable value of the fringe benefit is 75% of the lowest selling price of the general public in the retail market. The amount of the contribution of the employee should be deducted from the taxable value. According to the section 136(1) the FBT considered exempt in that cases if the taxable value is lower than the $300.

Here in the given case the value of taxable FBT is $150, but it is exempt.

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