Tax Law Australia Essay

893 Words Oct 13th, 2014 4 Pages
The flayer point received by Rosemary as a reward of customer royalty is not taxable. This is because of the following explanation;
1. Introduction
Australian Taxation Office widened the scope of collection of taxes in fringe benefits whereby flyer points are also taxed in the fringe benefits tax, Australian Taxation Office added to the 1999 Taxation Ruling that deals with fringe benefits tax in regard to reward gotten under “flyer points”including other identical customer loyalty programs. The ruling ordered that all flight rewards gotten under the loyalty rewards are in general not taxable.
2. Exception
This rule has exception circumstances where the flyer reward may be taxed, they include; Flight-royalty reward can be subject
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Australian Taxation Office issued a document that sets Australian Taxation Office procedure contained in TR 1999/6 and TD 1999/34 in regards to ways of determining whether amount received from consumer loyalty promotions are subject to either income tax or Fringe Benefit Tax.This documentstated that amount received in consumer loyalty promotions that are a result of points gotten from business expenses can be subjected to income tax or Fringe Benefit Tax. In calculating if such amount would be taxed, precise guidelines ensures that Australian Taxation Office considers if the arrangement had any commercial intent and was contrived, or if the arrangement provided that the amount were being given as a substitute forthe points accrued or income from a transaction or business expense. Also it considers circumstances where facts indicate that the amount received is a portion of an activity that is income earning and there exist a business relation between the reward provider and consumer of the loyalty points. Also it considers if benefit is transferable indirectly or directly to money or if the consumer is carrying on a business. According to the ruling of Rabbi S. Binyomin Ginsberg against Northwest reward gotten by an employee in consumer loyalty program can be made fringe benefit so that it can be taxed if facts indicate that there was an agreement between the employer and employee in that provision of reward has a sufficient and material

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