Harry is employed as a photographer with a Melbourne-based magazine company. His remuneration package with the company
Question:
Harry is employed as a photographer with a Melbourne-based magazine company. His remuneration package with the company is as follows:
• Salary of $100,000 per year.
• One return airline ticket to London, United Kingdom each year ($5,000 this year, no GST is charged on international airfares). The airfare is provided so that Harry can attend a prestigious annual photography exhibition in London. The exhibition showcases all the latest photography techniques, and it is important for Harry to attend so that he can keep up-todate and improve his photography skills. He believes that doing so will improve his chances of earning more income as a photographer as he will be able to take sought-after photos. Harry also likes going to London because his family lives in Windsor which is close to London.
• Payment of Harry’s HECS fees for a university course ($2,000 this year). Before moving to Melbourne, Harry was a famous photographer in London. His work is indemand all over the world. Harry has recently received a payment of $50,000 from one London magazine for agreeing to join that magazine if he ever moved back to England, and not work for any other magazine in England. Harry has no plans to return to England at this time.
(a) Advise Harry’s employer as to its fringe benefits tax consequences (including calculation of the FBT liability, if any) for the year ending 31 March 2021 in relation to Harry’s remuneration package. You may assume that the relevant legislation is the same as of 31 October 2020. You may also assume that Harry’s employer is registered for GST and that the employer has not provided benefits to other employees.
(b) Advise Harry as to his assessable income consequences arising out of the above information. You may assume that Harry is an Australian tax resident at all times.
Concepts in Federal Taxation
ISBN: 9780324379556
19th Edition
Authors: Kevin E. Murphy, Mark Higgins, Tonya K. Flesher