Got a tricky question? Receive an answer from students like you! Try us!

Fringe Benefits Tax - Essay Example

Only on StudentShare
Pages 10 (2510 words)


A car fringe benefit occurs when a car is provided by the employer for the private use of the employee. A car is meant to be 'held' by the employee when the car is provided on lease to the employee. In order to attract the FBT the car may be actually used by the employee for private purposes or is made available for the private use of the employees.(Australian Tax Office) Thus in the case of the employees of Techno Supplies even when the employees are away on the field work, the use of the cars by the family members would amount to private use of the car by an associate and therefore would attract FBT liability.

Extract of sample
Fringe Benefits Tax

This value is taxed on the top marginal tax rate.
A statutory formula is prescribed for the payment of the FBT based on the value of the car and the distance travelled during the year irrespective of whether the vehicle was used for business or personal purposes. The lease payments or the running costs do not matter for the calculation of the FBT.
If the car is made available for the personal use of the employees only for a certain period of the year then the FBT payable is calculated on a proportionate basis with the employer paying the FBT for the period for which the vehicle was actually used by the employee for his/her personal use instead of the whole year.
Under this method the employee is allowed to reduce the FBT liability by making their own contributions towards the running expenses of the car. These contributions are to be deducted from their after tax salary. ...
Download paper
Not exactly what you need?

Related Essays

Executive Compensation and Employee Benefits
A company with a number of products, clear vision and unique ideas stands to lure the most competent candidates in each and every level but to maintain this momentum of better performance, it is imperative that the top executive level secures the best talent. A compensation package which is attractive to ensure these talents are maintained at the top management level of the company since they enjoy significant negotiating power and as such additional incentives up and above the compensation package can be impacting in luring an executive to join an organization. Challenging and unique…
8 pages (2008 words)
Tax Evation
The Congress, the White House, and the Supreme Court cannot meet and do their businesses. As it is, taxes are the lifeblood of every government. However, people continuously exert their best efforts to evade taxes. They pursue different avenues in order to minimize, if not entirely avoid payment of taxes. Different styles or strategies have been used in order to attain this end. One, underreporting of incomes - usually, this strategy is being used by businesses, whether sole proprietorship, partnership, or corporation. This of course cannot be attained without the assistance of the…
10 pages (2510 words)
Tax System
iv. Flat tax system has shown its worth in some of the countries like Russia, and some other economies in transition like the Slovak republic, while some OECD nations like Italy, Greece and Mexico and actively pursuing the matter…
4 pages (1004 words)
Tax Planning
Tax avoidance is the process of planning business transactions in a manner that legally minimizes the amount of taxes due. The four maxims of tax planning are built around the premises of helping businesses work around tax liabilities. 1) Businesses turn over profits to entities that fall within lower tax rates. Reducing tax liabilities can be accomplished through both shifting income to lower-tax rate entities and shifting deductions to higher-tax rate entities. 2) Shift taxable income to a later time period as, in present value terms, tax costs decrease and cash flows increase when the…
6 pages (1506 words)