Question1a) You have been approached by Robin Hood, a client (law firm) who employs around 80 staff and as the result of a successful year, in recognising efforts of staff is considering holding the luncheon (and would be for the entire afternoon on Friday of September 20th 2013 (can be either on-site or off-site). He is also considering giving gifts to his employees as well. At this point, he is considering the following options;
• Present employees only attend;
• Present employees and their associates attend at the cost of $180 per head (to the firm)
• Present employees, their associates and some clients attend at the cost of $365 per head.
You are to advise Robin of any FBT implications for three considered options as well as implications of income tax deductions.
Question1b) Errol provides his employee with use of the car for 183 days during the FBT year ending 30th June 2013. At this time, car travelled 16,000km. Errol purchased car the prior year for $50,000. Employee contributed $1,000 towards running costs of the vehicle and has provided Errol with appropriate evidence.
Compute taxable value of the FBT for car applying the statutory formula.
Question2a) Bridgette owns and runs the small licensed (alcohol) cafe. Her refrigerator broke down and she contacted the old client and friend of hers, Eddie (electrician) to fix it. Eddie’s normal charge-out rate is $100 per hour and it took 2 .75 hours to fix ($275) but instead, they agree that Eddie can have food and beverages to that amount instead of the cash payment. Both Bridgette and Eddie are registered for GST. What are GST considerations for each party in regard to this arrangement (considering “supply”)?
Question2b) Bob the Builder is registered for GST and has recently completion the construction of a residence on a vacant block of land he purchased in Kingston. He employed a number of sub-contractors to build the house such as electricians, roof-tilers, plumbers, etc. all of whom included GST in their billings. Only a matter of weeks after the residence was completed, Bob sold the property to Thomas who in turns plans to rent out the property (tenancy). You are required to describe how GST (law) affects both Bob and Thomas.