Fringe Benefit Tax (Coursework Sample)

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Fringe Benefit Tax
Q1a. Advising Periwinkle
The concept of evaluating taxes is usually carried out on an annual basis. It most instances, however, regular tax payments are estimated and made throughout the year. The concept of personal income taxpayers is of many links to the company. It is crucial since employers are in a position to withdraw amounts on a regular basis which constitutes part of the PAYG withholding(COOLEY, 2003). At the same time, it represents the individual’s final liability that occurs after the end of the period. It takes place on the annual basis. The company will suffer the consequence of time management. The assessment period for the transfer payments is bound to fluction. For the allowances, it is restricted to a term of two weeks that the company shall have violated in their evaluation and assessment process. The main purpose of such implications is to make the both the entitlement and the rate of payment responsive to changes in the circumstances provided by the employee of the company. On a broader perspective, the situation at hand is considered to be unearned income. It is assessed annually and might affect the financial statements of the company.
On the same note, pensions might be paid fortnightly, the consequence of unearned income will still influence the state of the business. The implications presented for the family greatly relies on the family issue. The company should note that eligibility for family assistance is assessed on the annual income realized. The concept of assessment after two weeks does not apply to the above situation. The support offered to the family, and, for instance, the case of Emma with amounts reconciled after the elapse of the income year. The company might be faced to suffer much financial problem in evaluating the income generated during the stipulated time.In considering the case of Emma issuing the amount the asset acquired will have different treatments of the income earned. The amount given to the husband can still be seen as part of the private assets. The company will suffer many implications on such.In the context, the assistance given to the family will be treated with the same magnitude(COOLEY, 2003). Emma managed to give the money to the husband and will be processed with the same principlesThe company might suffer some transfer payments by the value of the assets of Emma and the husband. The company should evaluate their financial position since assets over a certain threshold value reduce entitlements to income support. The company has to consider the fact that the worth in assessing a person's home. It can also be constituted by the value of the rental services that are derived from their home that are assessed when determining taxes.
FBT Liability = FBT Taxable Value* Gross Up Factor*FBT Rate
=$450,000*4.455*2.0647
=$41392.07325
The value calculated above however could have been different if Emma have used the money to purchase the shares for herself. The implication will affect the fact that the level of personal assets will increase from a value of $450, 000 to a value of $500, 000.
The concept of personal service income can be directed to the above-presented value and will create many changes if Emma to the initiative of purchasing the shares for herself. In the instance, the PSI rule will only apply to such incomes (COOLEY, 2003). In the presented context, it is, however, possible to claim expenses against other income and the concept of standard tax rule will apply. The concept of allocating the income value to between the categories of benefits will turn to be a prudent idea in case the company receives both PSI and other income.
FBT Liability = FBT Taxable Value*Gross Up Factor*FBT Rate
=$5000, 000*4.455*2.0647
=$459991.1925
Q1 b. Ordinary Income
The rates at which income is taxed experience many variations. The average income is taxed at a much higher rate. In the analysis, they comprise of wages, salaries, commissions and interest rates that are considered to emerge from the bonds(COOLEY, 2003). On the same context, the ordinary income is characterized with standard tax deductions. On the contrary, capital gains might also arise and in most cases they can be offset by capital losses. In the development process, strategic plans are considered of much value than spending the current value of money. There is an encouragement to invest the capital amount rather that investing them. Due to that, the value of the capital gains is lower than ordinary income tax rates. The following instances can as well be explained in the same context applying the consequences that makes a consideration exist as ordinary income or not.
A cash price rendered to the student
The student is in a position of receiving some money from the government that is not termed as payment for work done. In the context, the amount cannot be considered as either wages or salary. On the same note, the student receives the cash price that does not constitute the payment for work done hence will not pose to salary or wages for the same situation. The situation can, therefore, be considered not to fall in the context of income in ordinary concept based on the arguments provided in the illustration above.
A gratuity received by a widow from her husbands' former employer in recognition of her husband’s services.
In the same context, it can be realized that the service that was being provided by the man already constitutes to some service being provided to the earning of salary after a given period. Even though the man might seize to exist currently, it is worth to note that the value is equivalent to the already provided service. The situation, therefore, falls in the context where the value is linked to the component of the payment deal. In that particular context, the situation can be treated as income in ordinary concept under the condition stipulated.
An honorarium received by a student
It is required that for the situation to be considered as an ordinary income, it has to constitute on the basis of salary, wages or commission. The case presented indicates that the concept is merely an appraisal and based on the achievement of a particular goal. It can therefore not be considered as a direct income. The concept again only affect the economic standings of investment and spending. It can not be seen as revenue in the ordinary theory.
A bonus received by an employee for a suggestion adopted by the management
The bonus received can be linked with the concept of commission received. The payment received by the employee is bound to much consideration in analyzing the financial implications of the country. Due to that, the situation can be considered as income in ordinary concept and will always affect the economic conditions of the particular firm or country.
Q2. Advising peter
The concept presented in the case of Peter can be resolved still. The case results from the prop...