Sandra Higgins is the marketing manager of Didget Finance Pty Ltd, a Sydney-based mortgage broking firm....

 

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Sandra Higgins is the marketing manager of Didget Finance Pty Ltd, a Sydney-based mortgage broking firm. She has sole use of a company-owned car. The car originally cost the company $58,300 (including GST) when it was provided to her on 1 March 2015. Sandra did not contribute to the running costs. As the firm had insufficient space on its premises to park the car outside office hours, Sandra was allowed to garage it at her home each night from the date of acquisition. During the FBT year ended 31 March 2019, the car was at the smash repairers for 12 days whilst the damage from an accident was being repaired. The company uses the statutory method for FBT purposes. During the FBT year ended 31 March 2019, Sandra also received the following benefits as part of her salary package: 1) Entertainment allowance $3,000 (GST Inclusive) p.a. 2) Sandra is required to travel to various locations to visit prospective clients. Her employer requires her to be contactable at all times and has provided her with a mobile phone for this purpose and pays all its related costs, including calls (on which GST has been paid). Sandra estimates that 80 per cent of the calls she makes are for private purposes. 3) A low interest loan of $100,000 provided to Sandra on 1 July 2018. The interest rate on the loan was 3.8%. Sandra used the money to finance extensive renovations to her principal place of residence. 4) Other benefits from her salary package entitle Sandra to have subscriptions to professional magazines ($350 pa), professional association membership subscription ($210), and the use of airport lounge membership ($460). 5) In February 2019, Sandra attended a two-day marketing conference at the Splinters Guest Resort in the Hunter Valley. She spent $750 on travel, accommodation and conference registration. Didget Finance Pty Ltd reimbursed her for the expenditure. Note: Didget Finance Pty Ltd is registered for GST REQUIRED: a) Explain what components of the remuneration package provided by Didget Finance Pty Ltd constitute a fringe benefit, and if so what type of fringe benefit. You must also explain why a component is or is not a fringe benefit. (10 marks) b) Where relevant, calculate the fringe benefits tax payable in respect of the particular remuneration component for the FBT year ended 31 March 2019. (Please show all workings). Sandra Higgins is the marketing manager of Didget Finance Pty Ltd, a Sydney-based mortgage broking firm. She has sole use of a company-owned car. The car originally cost the company $58,300 (including GST) when it was provided to her on 1 March 2015. Sandra did not contribute to the running costs. As the firm had insufficient space on its premises to park the car outside office hours, Sandra was allowed to garage it at her home each night from the date of acquisition. During the FBT year ended 31 March 2019, the car was at the smash repairers for 12 days whilst the damage from an accident was being repaired. The company uses the statutory method for FBT purposes. During the FBT year ended 31 March 2019, Sandra also received the following benefits as part of her salary package: 1) Entertainment allowance $3,000 (GST Inclusive) p.a. 2) Sandra is required to travel to various locations to visit prospective clients. Her employer requires her to be contactable at all times and has provided her with a mobile phone for this purpose and pays all its related costs, including calls (on which GST has been paid). Sandra estimates that 80 per cent of the calls she makes are for private purposes. 3) A low interest loan of $100,000 provided to Sandra on 1 July 2018. The interest rate on the loan was 3.8%. Sandra used the money to finance extensive renovations to her principal place of residence. 4) Other benefits from her salary package entitle Sandra to have subscriptions to professional magazines ($350 pa), professional association membership subscription ($210), and the use of airport lounge membership ($460). 5) In February 2019, Sandra attended a two-day marketing conference at the Splinters Guest Resort in the Hunter Valley. She spent $750 on travel, accommodation and conference registration. Didget Finance Pty Ltd reimbursed her for the expenditure. Note: Didget Finance Pty Ltd is registered for GST REQUIRED: a) Explain what components of the remuneration package provided by Didget Finance Pty Ltd constitute a fringe benefit, and if so what type of fringe benefit. You must also explain why a component is or is not a fringe benefit. (10 marks) b) Where relevant, calculate the fringe benefits tax payable in respect of the particular remuneration component for the FBT year ended 31 March 2019. (Please show all workings).

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SOLUTION STATEMENT OF FBT COMPONENTS IN SALARY PACKAGE OF MRSANDRA HIGGNIS AND CALCULATION OF FBT TH... View the full answer