Calculate the taxable value of car fringe benefit using a 'statutory formula'

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Question - A. Calculate the taxable value of the fringe benefit using the statutory formula in the following case context: Nancy provided her employee (William) with the use of a Toyota Pajero car 216 days during the Fringe Benefit Tax year. During the period, the car travelled 12,000 km. Nancy purchased the car last year for $65,000. William contributed $2,000 towards the cost of running the car and has provided Nancy with relevant documentation.

B. Rory is a staff of a furniture manufacture company. His employer allowed him to purchase an office table for $ 1,200. The table would ordinarily be sold to customers for $1,800. Calculate the taxable value of the fringe benefit.

Answer -

As per the section 9 of FBTAA, employers are allowed to calculate the taxable value of car fringe benefit using a 'statutory formula'.

The formula is: Taxable value of car = (A*B*C/D)-E


A = This denotes the base value of the car this is basically the amount paid by the employer to purchase the car. It could be cost price if car is owned or leased value if it is on the lease, the same stands at 65,000 here

B = The same denotes statutory fraction and the value of the same is 0.2

C = This denotes the day in FBT year for which fringe benefit was provided and the same stands at 216 days

D = This denotes the no of days in FBT year

E is the amount paid by the employee, in this case the same stands at 2000

Hence, as per statutory formula, the taxable value comes at

= (65,000 × 0.20 × 216)/365 -2000 = 5693.150685

b) As expressed in section 40 of FBTAA, the property advantage emerges when an individual gives a property to someone else. Presently, we need to take a look at the meaning of the property and the same is given in the Section 136(1) FBTAA. The same incorporates bothtangible and intangible property.

Presently for the available worth, the same relies on whether the property was an inhouse property or outside property. In case it is in house s 42 FBTAA is applied else 43 FBTAA is applied.

In case of inhouse property, the fringe advantage can possibly emerge if the property is tangible in nature and the same is given by the business or any employee of firm and a similar property is additionally sold in house by the business of the property supplier.

By seeing at the current case, we can see that Rory's manager is occupied with furniture manufacturing (Brejdak, 2018, p.89(3)). The business offers the furniture to client directly (retail). The taxable value here would be 75% of the least price at which similar property was offered to general public or $1,350 ($1,800×75%), reduced by the recipient's contribution or $1,200, which gives a taxable value of $150 ($1350 less $1,200). The taxable value of the in-house property fringe benefit may be reduced by $1,000 under s 62 FBTAA (provided the furniture was not provided under a salary packaging arrangement). Along these lines, no FBT should be paid.

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