Miriama is a senior manager of Canterbury Roofing Ltd, a busy Christchurch roofing materials manufacturer. In this role she is provided with a Ford Escape SUV originally costing $52,000 (including GST). The car was acquired by her employer in January 2018. The back seats are permanently folded down with a custom-made wooden board fitted. There is no sign writing on the vehicle. Miriama has full and unrestricted use of the Ford. She is required to regularly visit the South Island customers of Canterbury Roofing Ltd. In addition, Miriama is also on call and from time to time she may be called back to the Christchurch premises of Canterbury Roofing Ltd after hours if an emergency arises.

You are advised that Miriama used the Ford for a 9 day business trip in October 2022 and a 7 day business trip in December 2022, travelling to Canterbury Roofing Ltd’s major South Island customers. Also, on Wednesday 2 November 2022 she visited customers of Complete Solar Ltd in Tekapo, leaving Christchurch at 10:30 am (morning). She stayed overnight in Tekapo and returned to Christchurch the next morning (Thursday), arriving back at 10:00 am. In addition, in January 2023 she used the car for a 4 day business trip to visit Canterbury Roofing Ltd customers on the South Island West Coast.

During the three month period to 31 December 2022 she was called out on 4 occasions to the Christchurch premises of Canterbury Roofing Ltd because of problems with its plant. The details of these 4 visits are:

• Wednesday, 12 October 2022 at 5:00 p.m. (afternoon)
• Sunday, 30 October 2022 at 2:00 p.m. (afternoon)
• Friday, 25 November 2022 at 7.00 p.m. (evening)
• Monday, 5 December 2022 at 7:30 a.m (morning)

On these occasions she used the Ford to travel to the Christchurch premises.

You are also advised that:

• In December 2022 she also used the car to go on holiday to Nelson for 12 days. While in Nelson, the car was not used, being left at the motel.
• The car was in a mechanic’s garage for a 5 day period in October 2022 being serviced, and was therefore not able to be used by Miriama.
• She contributes $75 per month to the car’s running costs.
• The adjusted tax value of the Ford Escape SUV is now $22,000 (including GST).

REQUIRED:

What is the taxable value and fringe benefit tax (FBT) payable on the fringe benefit above, if any, provided in the quarter to 31 December 2022? Your answer should show all calculations/workings and include brief explanations (as necessary). Assume that if FBT applies:

• It is calculated on a daily basis (i.e. midnight to midnight);
• The taxable value of the benefit is calculated using the adjusted tax value option; and
• The relevant FBT rate for calculating the FBT payable by the employer is 49.25%.

Note: There are four quarters for FBT purposes: March quarter (January, February, March) 90 days; June quarter (April, May, June) 91 days; September quarter (July, August, September) 92 days; December quarter (October, November, December) 92 days. According to New zealand gst laws.

Answer rating: 100% (QA)

To calculate the taxable value and fringe benefit tax FBT payable on the fringe benefit for Miriamas ... View the full answer