Assignment task: You have recently been employed by Market Link Services Pty Ltd, a remuneration consulting company. They employed you because of your expertise in taxation law.
One of their clients is a motor parts company. The motor parts company wants to provide staff with the following benefits but is unsure of the income tax and fringe benefits tax consequences.
The benefits to be provided to the staff are:
- A motor vehicle under a novated lease arrangement,
- A car allowance of $1,500 per staff member
- A staff discount of 20% to allow employees to purchase motor parts for their own private use.
REQUIRED:
You are requested to provide a written report to the motor parts company on the income tax and fringe benefits tax consequences of providing the benefits to the employees. The motor parts company does not want to be liable for FBT under any circumstances and is unsure how a novated lease works without generating a FBT liability.
In your report you are to advise:
- What type of benefits they are,
- Who pays the tax, if any, and what type of tax is payable?
- How the tax liability can be reduced, if at all,
- How the tax liability is calculated