Geoff is an employee of Computer Systems Ltd (Computer Systems).  He is employed as a computer programmer on a salary of $150,000 a year.

 

On 1 July 2021 Geoff commences to also carry on his own business.  He carries on his own business on weekends and outside normal working hours from his home. In his own business he provides programming services to a number of different clients and is paid on an hourly basis for the services he renders.  Geoff's business generates revenue of $100,000 during its first year of operation.

 

One of the clients that Geoff provides his services to is Zhong Accounting Pty Ltd (Zhong Accounting).  Geoff undertakes programming work in setting up the accounting and reporting systems of Zhong Accounting.

 

Geoff is married to Sue and they have a 19 year old son John and a 15 year old daughter Kate.  Geoff also owns a residential unit (in addition to the family home) which he rents to Harry for $500 per week.

 

During the 2022 income year (1 July 2021 to 30 June 2022) the following events happen:

 

1. Geoff is paid his salary of $150,000 (albeit he receives only $110,000 after Computer Systems withholds $40,000 pursuant to the PAYG (withholding) regime).

 

1. Geoff performed services for Zhong Accounting and invoiced Zhong Accounting $1,000 for the services rendered but accepted a dozen bottles of champagne worth $500 from Zhong Accounting in full satisfaction of the invoiced amount.

 

1. In consideration for Geoff performing services worth $5,000 for Zhong Accounting, Zhong Accounting provided $5,000 of accounting services to Geoff's business for no charge.

 

1. In lieu of paying Geoff a Christmas bonus of $10,000, Computer Systems reimburses Sue an amount of $10,000 for a new fridge and oven that she had purchased for the family home.

 

1. Computer Systems as part of the remuneration package provides its employees with a nil interest loan up to but not exceeding a maximum loan of $100,000.  Geoff is provided a loan of $100,000 by Computer Systems (at nil interest) which he used to purchase the residential unit he rents to Harry.

 

1. Due to the excellent services Geoff has provided to Zhong Accounting, Zhong Accounting provides Geoff with an interest free loan of $50,000 for 2 years which Geoff uses to pay for an emergency medical operation for his wife Sue.

 

1. Computer Systems vacates its office premises over one weekend and moves its business to new premises.  Computer Systems engages John and Kate to assist in cleaning up the former office premises and gives each of them a $1,000 gift voucher for use at David Jones stores for the two days of work.

 

1. Computer Systems terminates Geoff's employment in June 2022 and as compensation for the termination of his employment makes a payment to him of $50,000 as an interest free loan that is repayable in June 2025.

 

1. Zhong Accounting provides Geoff with technical manuals to keep that are worth $2,000 providing up to date information relating to the design of accounting systems suitable for the business carried on by Zhong Accounting.

 

1. In consideration for Harry giving Geoff free concert tickets worth $2,000, Geoff waives the obligation for Harry to pay rent for 4 weeks. The concert tickets are not able to be redeemed for cash or transferred to anybody else.

 

Advise Geoff, Sue, John, Kate and Computer Systems as to whether they are assessable (under the income tax or fringe benefits legislation) in respect of the amounts/benefits received and provided under the above scenarios for the income year ended 30 June 2022.

 

 

Not required to consider deductibility or to undertake any calculations of the tax payable in answering this question but, if applicable, should consider the "otherwise deductible rule" under the relevant legislation.

Answer rating: 100% (QA)

Geoff Salary of 150000 received 110000 after withholding Geoffs salary is assessable income and the withheld amount is part of the PAYG withholding sy... View the full answer