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Flashcards in FBT Deck (20)
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1
Q

What is FB classified as and under what section

What is extempt benefit classified as

A

Income which is a “fringe benefit” under the FBTAA is non-assessable non-exempt income s 23L(1) ITAA36

Income which is an “exempt benefit under the FBTAA is generally exempt income s23L 1A

2
Q

What is the FBT year

How many types of FBT are there

What is the FBT asssed under and who is it imposed on

A

FBT year: 1st April to 31st March

There are 13 types of fringe benefit, all valued differently

There are 13 types of fringe benefit, all valued differently. FBT imposed on employers

3
Q

When does a fringe benefit arise and under what section is this definition

A

S 136 FBTAA98

A benefit is proved during a year of tax

By an employer, an associated of the employer or a third party under an arrangement with the employer or associate of the employer

to an employee or an associate of the employee

In respect of the employment of the employee

There must be nexus between the employer / employee relationship and receiving the fringe benefit.

4
Q

Under what section are exclusions stated

give some example of exclusions

Give some examples of exempt benefits

A

S 136 FBTAA98

Salary or wages

superannuation contributions

benefits under employee share schemes

Entempt benefits

  • exempt loans
  • exempt car expense payment benefits
  • minor benefits with taxable value under $300
  • tool and certain equipment used primarily in the employees employment
5
Q

There are 13 FBT categories state the 7 that is relevant and how each category dealt with in the statue

A

Each is dealt with in two parts, the first part of the legislation deals with the definition of the fringe benefit and the subsection deals with how to calculate the fringe benefit taxable amount. There are further definitions in 136 A.

  1. Car
  2. Debt waiver
  3. Loan
  4. Expense payment
  5. Housing
  6. Property
  7. Residual
6
Q

What is the definition of car benefits

A

A car benefit arises where the employer’s car is made available to the employee for private use. Private use means use other than using it to derive assessable income

7
Q

What is a debt waiver benefit

What is the taxable amount of the debt waiver fringe benefit

A

Employer waves the employees obligation to pay the debt.

Taxable value of the debt waiver fringe benefit is the amount of the payment or repayment that has been waived

8
Q

What is the Loan Fringe Benefit.

What is the taxable value of the loan fringe benefit

Explain the implication of the otherwise deductible rule

A

Where an employer makes a loan to the employee. The taxable value is the interest that the employee saves by the employer providing the loan at reduced rate of interest.

Taxable value = Notional Interest - Accrued Interest

Reduces the taxable value of the loan fringe benefit where the employee use the loan for income producing activities which are entitled to deductions.

9
Q

What is the expense payment benefit

What is the difference between in-house property and in house residual benefits

What are other expense fringe benefits

How does the otherwise deductible rule apply

A

Employer reimburses an employee expenditure

In both cases it is a reimbursement by the employer to the employee in the ordinary course of business. In the case of in house property the purchase is property while residual in house benefits deal with other benefits. Both have to be in the ordinary course of benefits

All other expense payment fringe benefits are external expense payment fringe benefits.

Otherwise deductible need to go over

10
Q

What is the property benefit

What is the In-house property benefit and external property benefits

How does the otherwise deductible rule apply

A

Employer provides property to the employee

In-House property benefit : of a sort that is not normally sold as part of the employers benefits. All other types of property benefit

Otherwise deductible : Need to go over

11
Q

What is the residual benefit

What are the four categories that affect taxable value

What is the period benefits

and how does the otherwise deductible rule apply

A

Category that captures benefits that does not fall in one of the other definitions

Taxable value will depend on whether benefit is:

  1. In-house non-period residual fringe benefit
  2. In house period residual fringe benefit
  3. External non-period residual fringe benefits
  4. External period residual Fringe benefit

Period benefits refer to benefits that last for more than a day and non-period benefits last less than a day.

Operates subject to “otherwise deductible” rule (need to research this)

12
Q

What is unique about calculating taxable values.

When can concessional treatment apply

How does Unreimbursed recipient contribution affect the calculation of FBT

How does otherwise deductible rule affect the calculation of the FBT

How does reduction amount affect the calculation of taxable value of certain fringe benefits

A

Each kind of fringe benefits has its own valuation rules

Concessional treatment sometimes applies to “in-house” benefits, but not where there is salary sacrifice arrangement

Unreimbursed recipient contributions reduce the taxable value of fringe benefits

“Otherwise deductible rule” reduces the taxable value of fringe benefit

Reduction amounts are subtracted from the taxable value of certain fringe benefits

13
Q

What is the otherwise deductible rule

what are the Fringe benefits it applies to 6 categories

A

Generally, reduces the taxable value by the deduction that the employee would have otherwise received if he or she had incurred the expenditure to acquire the benefits

  1. Loan FB
  2. Expense payment FB
  3. Airline transport FB
  4. Board FB
  5. Property FB
  6. Residual FB
14
Q

What is the formula for the fringe benefits taxable amount

What are the four step to calculate the FBT

A

Fringe Benefit taxable amount= [ Type 1 aggregate fringe benefits amount ×gross up factor ]+ [ Type 2 aggregate fringe benefits amount × gross up factor ] + aggregate non exempt amount

Gross up factors change depending on the year

Step 1 : Calculate the taxable value of each fringe benefit

Step 2 : Divide benefits into:
“GST – creditable benefits” (Type 1)
“other Benefits” (Type 2)

Step 3: Multiply each type by the gross up factor depending on which year it is.

Step 4: Add the employers “aggregate non-exempt amount” (not examinable)

15
Q

What is the aim of the gross up factor

A

Aim of the gross up factors is to remove any biases or advantages from employers providing fringe benefit to employees over paying regular income.

Look at example on p510

16
Q

What is the formula for the FBT

A

FBT=Fringe benefits taxable amounts for the year of tax ×FBT rate

FBT rate”

46.5% (13/14)

47% (14/15)

49% (15/16)

17
Q

What is the implication of FBT AND costs associated for the employers

What is the tax year for FBT

How do employer access FBT

A

FBT and the cost of benefits are generally deductible to employers under s8-1 ITAA97

1 April to 31st March

Employers required to self-assess FBT

18
Q

Why cant tax exempt employers claim a deduction and how do they overcome this

A

Tax-exempt employers are precluded from deductions by third negative limb of s 8-1

Special rebate applies under s 65J FBTAA to rebate employers

19
Q

What is the reportable fringe benefits total

What value must it exceed

What is reportable fringe benefits total relevant for

A

Reportable fringe benefits total for an income year is the sum of their “ reportable fringe benefits amounts “ for the income year. Simply it is the sum of the “ taxable value” of the fringe benefits other than excluded benefits multiplied by a gross up factor calculated according to a statutory formula

(make sure this is right check with brian)

This amount must exceed $2 000

Reportable fringe benefits total is relevant for determining an employee’s income for surcharge purposes and repayment income. Income for surcharge purposes is useful for calculating Medicare Levy surcharge

20
Q

What is adjustable fringe benefit total relevant for

What is the formula for reportable fringe benefits total

A

Adjusted Fringe benefits total is relevant for determining a taxpayer’s rebate income and adjusted taxable income

reportable fringe benefits total for the year multiplied by a gross up factor calculated according to a statutory formula

(make sure this is right check with brian)