FBT and Allowable Deductions
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Question One
The taxation consequence of the scenario portrays different obligations on both Sharon and Bob. I will explain each party's responsibilities in detail below.
Sharon:
(a) $100,000 per year remuneration
From the information provided, Sharon's remuneration package could include:
Salary, including leave loading,
Superannuation,
Company Car,
Laptop Computer.
A mobile phone could also be included as part of her annual package.
Sharon's salary and leave loading is deemed to be ordinary income, as defined in s6-5 ITAA97. She is obliged to lodge an individual income tax return to determine the net balance of any tax liabilities . Sharon could also further reduce her tax liabilities by entering in a salary sacrificing agreement (SSA) with her employer to direct a percentage of her wage to an approved superannuation fund.
Sharon is allowed to reduce her assessable income by claiming for work related allowable deductions incurred throughout the financial year.
(b) Company Car
Sharon's tax consequences are not affected by utilising a company car. The motor vehicle is provided as a fringe benefit, and is subject to a fringe benefit tax as per Division 2 FBTAA, which is a tax imposed against an employer, not the employee...