Fringe Benefit Tax Case Study

Great Essays
Answer to Question No. 1 (a)
Fringe benefit refers to the benefit that is provided toan employee or an associate of the employee by the employer or associate of an employer in any given year in respect of the employment of the employee. It refers to any benefit that is provided over and above the salary of an employee. Benefit refers to anything that is provided to the employee by the employer which he would actually have to incur himself if the benefit was not provided by the employer.
It aims at levying tax on the benefits that cannot be availed by the employee or an associate of employee but cannot be converted into cash. All the benefits that are provided are in respect of the employment of the employee.
An employer can either be a former
…show more content…
All the items of forming part of remuneration package for Alan have been hereby discussed separately for the applicability of Fringe Benefit Tax:
• Salary – Salary does not form part of Fringe Benefit Tax and is thereby excluded from the purview of Fringe Benefit Tax.
Mobile Phone Bill –In the case of Mobile Phone Bill initially we can state that Fringe Benefit Tax would not be levied as the Mobile is being used for official purpose. However, on close examination of the scenario we can state that the mobile phone bill is a committed expense for Alan as it is under two-year contract. Therefore, the sum would be charged irrespective of the fact that whether it is being used for official or personal purpose and whether Alan is associated with the company in the future or not as per this scenario. Therefore, it would be Fringe Benefit Tax would be levied on it. However, we have to also note that any benefit that is given to the employee whose:-
i) Taxable value is less than
…show more content…
The above limit would apply to each exemption and it would not be cumulative exemption.
In the given case we can observe that the mobile phone bill of the employee is $220 which would come under the purview of above but it has also to be noted that the mobile bill phone expense is a recurring expense and it would recur every month. Therefore, it would not suffice the second condition for being regarded as an exempted benefit and therefore, Fringe Benefit Tax would be levied on it.
• Payment of Alan’s Children School Fee: In the given case we can observe that it isnot an allowance rather a reimbursement for the actual expenditure that has been incurred by the employee. Therefore, it would be considered as a Fringe Benefit and Fringe Benefit Tax would be levied on it. In the given case, we can clearly observe that it is a benefit that is provided by the employer to the employee and therefore, Fringe Benefit Tax would be applicable on it.
• Mobile phone handset: In the given case, the employer has provided the employee with a mobile phone handset costing $2,000. There are certain items that are exempt from Fringe Benefit namely:-
i) a portable electronic

Related Documents

  • Improved Essays

    History of the Act. The Women’s Legal Defense Fund in 1984 came up with a draft of the legislation that was later to be the Family and Medical Leave Act (FMLA). The legislation was later introduced to the Congress each year from 1984 to 1993 but was repeatedly blocked by entrenched opponents. The Congress finally passed the legislation in 1991 and was passed by the 103rd Congress in 1993 which was the only Congress that had a majority that President Bill Clinton had.…

    • 1089 Words
    • 5 Pages
    Improved Essays
  • Improved Essays

    Gundecking In The Navy

    • 665 Words
    • 3 Pages

    Gundecking refers to the Naval term of falsifying official reports, more so lying about meeting certain requirements that were never carried out accordingly (Gundeck, n.d.). In the United States Navy, this can span from inflating the supply count on a naval ship to committing fraud and bribery. Gundecking can sometimes seem innocuous but the gravity of not presenting the correct information can have serious consequences. According to the Origin of Navy Terminology, there is no clear history or origin of the tenn "gundecking" but this tenn has written documentation of how this tenn was used in the past.…

    • 665 Words
    • 3 Pages
    Improved Essays
  • Superior Essays

    There is no denying that Childcare costs can be very expensive. In any case that you get the work done well you might have the ability to make significant savings. A tip to lower the overall Childcare costs is to look around before settling on a Childcare specialist or private caretaker. Thereupon one shall ask the parents in the work environment as well as in the Neighborhood.…

    • 1285 Words
    • 6 Pages
    Superior Essays
  • Improved Essays

    Hrm/531 Week 1

    • 881 Words
    • 4 Pages

    I fail to understand the provisions of the contract that prevents employees from crediting information to themselves rather than the company. The company should recognize the efforts by employees in issues to do with innovation. Question 7 The main concerns of being an employee in this company are that the employee is restricted in the conversations they can have because they might create a business.…

    • 881 Words
    • 4 Pages
    Improved Essays
  • Great Essays

    1.1ist the aspects of employment covered by law There are many aspects of employment which are covered by law. These include data protection act, confidentiality of employee information, wages, sick/holiday pay, health and safety and DBS. 1.2List the main features of current employment legislation There are a number of features of current employment legislation. From the main features are employment rights, equality and discrimination and health and safety.…

    • 1787 Words
    • 8 Pages
    Great Essays
  • Improved Essays

    As a high income earner you will only be taxed on the total amount which is actually spent by…

    • 837 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Legally mandated benefits include Social Security taxes, Unemployment Insurance taxes, and Workers’ Compensation benefits. In addition, companies are required to provide Family and Medical Leave Act (FMLA) and States Leave of Absence benefits for qualified leave of absences. Furthermore, companies need to provide special accommodations for employees protected under the Americans with Disabilities Act (ADA), in order to ensure equal employment opportunities for all…

    • 788 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Wage and salary levels determined for each position at Planned Parenthood relies on various factors. The position of the employee and their expertise in a specific field (whether it is administrative, clinical, or educational for example) are all varying determinants of wages. Our organization has continuously provided higher wages for our employees and entry level candidates compared to other organizations through external wage surveys. * These surveys are modified to narrow down various dimensions including job position evaluations, external market analysis, location(s), and years of experience in a respective field. * Furthermore, job positions tailored to a specific role are reviewed and wages can be set based on employee performance, knowledge…

    • 787 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Immigrant Work Force

    • 1203 Words
    • 5 Pages

    As for the income tax, the government cannot tax something that is not listed as income. Justich’s (2005) says, “We estimate that…

    • 1203 Words
    • 5 Pages
    Improved Essays
  • Improved Essays

    4. CORRESPONDING DUTIES: As a user of the company network you have the following obligations: 1) To answer for your personal account granted to you by CRI company. 2) To keep confidentiality of company’s information, maintaining its integrity and keeping information from being accessed by non-authorized users.…

    • 1019 Words
    • 5 Pages
    Improved Essays
  • Improved Essays

    1. The DPP understands ST’s challenge to Document A ’s admissibility to be that they contend Document A falls within s 130(4)(f) to relate to “matters of state” for section 130(1) to apply. The DPP deny this. 2.…

    • 1019 Words
    • 5 Pages
    Improved Essays
  • Decent Essays

    Sme Tech Case Study

    • 98 Words
    • 1 Pages

    SME Tech is terminating the employment of five engineers in Ontario and Quebec. Wages in lieu is employment income so that organization has to contribute CPP and EI portion in Ontario while in Quebec EI and QPIP portion for employees as per Employment Standard. Vacation pay is employment income and SME has to contribute CPP/QPP, EI, QPIP portion for their employees. While contributing CPP/QPP, EI and QPIP premiums, it is cost to the organization. Severance pay and retiring allowances are employment income and SME tech has not to contribute anything and it is cost free for the…

    • 98 Words
    • 1 Pages
    Decent Essays
  • Improved Essays

    During the early years in America women did not have the same right and the privileges as men. Women were given , the role to stay at home to take care of the children and tending to domestic affairs. This changed when Congress passed the constitutional amendment allowing women to vote. Though the amendment failed In 1972 the Equal Rights Amendment was submitted by congress.…

    • 2375 Words
    • 10 Pages
    Improved Essays
  • Improved Essays

    1. Point out which changes are occurring in the business that affect HRM. The external factors due to change in the company revenue which will increase in the next three years due to the up economy affect, with this happening the company will be extremely busy. The company has a total of ten employees that handles the HR functions, in three years five of them will be retiring, leaving only five that are of diverse ages to handle major changes.…

    • 820 Words
    • 4 Pages
    Improved Essays
  • Superior Essays

    Over the course of human history, we have always done business of one kind or another. From transactions in the market, to transactions in the stock exchange; business is everywhere. Business is simply the means of exchange, between two or more people. The only thing that is changed about business is how we communicate with others: the tools we use to control these same transactions. In the past we have had various ways to communicate, such as: in person conversations, letters, telegrams, telephones, email, etc.…

    • 1125 Words
    • 5 Pages
    Superior Essays