Practical Problem

Wally is a client of the practice that you work at. He has come to see you and your supervisor and provides you with the following information at conference.

Wally is a manager employed by Upbeat Pty Limited under a seven-year contract. His employment package consists of the following:

1. annual salary of $100,000 payable monthly;

(ii) a loan at interest rate 7.5% below market rates to assist in the purchase of his home the loan is provided by a bank that is a client of Upbeat Pty Limited who is prepared to offer a home mortgage at 7.5% below market rates to employees of Upbeat Pty Limited provided the latter goes guarantor;

(iii) an all expenses paid surfing holiday to Bali for himself and his family each year (if he wishes it).

You have been asked by your supervisor to provide a memorandum of advice to Wally of the tax consequences for him of these payments, receipts and entitlements.

You must cite the relevant legislation and case alw to support your answers.