Question 1

A company has 40 employees and provides each of them with cheap parking on its premises. During the FBT year ended 31 March 2020, there were 216 days during which the reduced carparking was made available.The daily rate amount for each parking space is determined to be $14. Each employee who received the reduced rate parking contributed $4. What is the taxable value of the carparking fringe benefit provided to these employees if the employer elects to use the statutory formula method?

Accepted Answer

The answer of A company has 40 employees and provides...

Question 2

Which of the following statements about the way FBT liability is calculated is incorrect?

Accepted Answer

A)   The FBT rate of tax is 47% for the FBT year ended 31 March 2020
B)   The gross-up factor for Type 1 benefits is 1.8868
C)   The FBT year ends 31 March
D)   The taxable value for each type of fringe benefit is determined by the rules for that type of fringe benefit B

Question 3

An employer purchases a car on 1 October 2019 for $35,000 and provides that car to an employee to use for private purposes for the rest of the FBT year. If the employee reimbursed the employer $2,000 for using this car, what would be the taxable value of this car fringe benefit provided under the statutory formula method?

Accepted Answer

A)   $35,000
B)   $5,000
C)   $3,500
D)   $1,500 D

Question 4

Which of the following is not an obligation of either the employer or employee in terms of the reporting and payment obligations of any fringe benefits tax liability?

Accepted Answer

A)   An employee will have a reportable fringe benefit amount if the total taxable value of the fringe benefits provided to the employee by an employer during the FBT exceeds $2000 and would then to show this amount in their tax return
B)   An employee will have a reportable fringe benefit amount if the total taxable value of the fringe benefits provided to the employee by an employer during the FBT exceeds $2000 but would not need to show this amount in their tax return
C)   An employee will not have a reportable fringe benefit amount if the total taxable value of the fringe benefits provided to the employee by an employer during the FBT does not exceed $2000 and so then would not need to show this amount in their tax return
D)   Employers who have provided fringe benefits to their employees and had a fringe benefit taxable amount for the FBT year are required to lodge annual FBT returns

Question 5

Bells Pty Ltd sells telephone systems to the public and on occasion they sell off some of their old furniture to employees at 10% of its resale value. For the FBT year ended 31 March 2020, Bells Pty Ltd sold 10 items of furniture that a resale value of $5,000 in total. These items were sold to staff for $500. What is the taxable value of the sale of this furniture to employees?

Accepted Answer

A)   $3,250
B)   $3,750
C)   $4,500
D)   $5,000

Question 6

Which of the following is not a stated reason why the fringe benefits tax was introduced into Australia?

Accepted Answer

A)   As there was a recognised technical complexity in the previous law and difficulties in the tax administration to ensure that all types of fringe benefits were clearly reported by employees
B)   To raise extra revenue for the government
C)   To reduce the government's burden and to increase the efficiency in the administration of the taxation on fringe benefits. This is achieved as the government can focus on dealing with fewer taxpayers
D)   It was recognised that employees generally did not comply with section 26 (e)  of ITAA36

Question 7

An employer provided an interest-free loan of $50,000 to an employee on 1 April 2019. The employee used this loan 50% for private purposes and the remaining 50% was used to purchase shares in companies that pay dividends. What is the taxable value of this loan fringe benefit?

Accepted Answer

A)   $2,685
B)   $1,342
C)   $0
D)   Some other figure

Question 8

Josie is a full-time employee of a company and works 5 days a week and 8 hours per day. As part of her salary package, the company allows Josie to park her car on the business premises on her working days for $2 per day. Within one kilometre from the company's premises, there are two commercial car parks that are open to the public. The early bird all-day parking rates charged by these two car parking stations are $16 and $19. During the FBT year ending on 31 March 2020, Josie worked 220 days. What is the company's FBT liability?

Accepted Answer

The answer of Josie is a full-time employee of a...

Question 9

Which of the following would not involve a fringe benefit?

Accepted Answer

A)   The payment by an employer to an employee of an allowance for the employee to be able to use their own car for work purposes
B)   The provision of a loan by an employer to an employee at a lower rate of interest than the notional interest rate
C)   The reimbursement of a telephone expense by an employer to an employee
D)   The provision of a car by an employer to an employee where the employee is able to use the car for private use

Question 10

Which of the following statements is true for the way in which any fringe benefits tax liability is calculated?

Accepted Answer

A)   Taxable value of benefit x Gross-up factor x FBT rate
B)   Taxable value of benefit x FBT rate
C)   Gross-up factor x FBT rate
D)   (Taxable value of benefit - gross-up factor)  x FBT rate

Question 11

An employer purchases a car on 1 May 2019 for $33,000 and provides that car to an employee to use for private purposes for the rest of the FBT year. A log book was maintained by the employee, which showed their work related use of the motor car to be 30%. If the employee reimbursed the employer $3,000 for using this car and the total operating costs for this car (including any deemed depreciation and interest) were $16,000, what would be the taxable value of this car fringe benefit provided under the operating costs method?

Accepted Answer

A)   $16,000
B)   $11,200
C)   $8,200
D)   $1,800

Question 12

BBC Earthmovers Pty Ltd provides an employee with the use of a company car for each day of the FBT year ended 31 March 2020 and the employee is able to take this car home every night. The car cost $44,000 and was purchased on 1 April 2019. A log book has been kept showing that the work related use was 30% for the year. The various running costs, including the deemed depreciation and interest, amounted to $19,000. The employee paid the employer $5,200 for the use if this car for the year ended 31 March 2020. Calculate what the FBT liability of BBC Earthmovers Pty Ltd is in relation to this car fringe benefit provided for the FBT year ended 31 March 2020.

Accepted Answer

The answer of BBC Earthmovers Pty Ltd provides an employee...

Question 13

On 1 April 2018, a company provided its employee Jason with the use of a two-bedroom apartment in Brisbane. During the FBT year ending on 31 March 2019, the market rental rate for this apartment was $400 per week ($20,800 annually) and Jason paid $100 per week ($5,200, annual rent payment). The weekly market rental in the FBT year ending on 31 March 2020 increased to $440 ($22,880, annual total rental), and the company did increase Jason's weekly rental rate to $120 per week. What is the employer's FBT liability on the provision of this accommodation?

Accepted Answer

The answer of On 1 April 2018, a company provided...

Question 14

An employer provides a $30,000 loan to an employee, in respect to their employment, at an interest rate of only 2%. All of the loan monies are used for private purposes. What would be the taxable amount of this loan fringe benefit?

Accepted Answer

A)   $600
B)   $1,011
C)   $1,907.55
D)   $2,103.08

Question 15

Which one of the following is not correct with respect to the reportable fringe benefit amount?

Accepted Answer

A)   The reportable fringe benefit amount is purely a statistical number as it has no effect at all on the employee's taxation or other liabilities
B)   The reportable fringe benefit amount is taken into account in determining the entitlement to a tax offset for contributions made by the taxpayer to his/her spouse's superannuation funds
C)   The reportable fringe benefit amount is taken into account in determining the entitlement to the private health insurance rebate
D)   The reportable fringe benefit amount is taken into account in calculating whether and how much Medicare levy surcharge is payable

Question 16

ABC Computers reimburses the telephone expenses ($120 per month), for each month of the FBT year ended 31 March 2020, of an employee. The employee has kept records showing that 70% of her telephone expenses relate to work calls. What is the taxable of this expense payment fringe benefit provided by ABC Computers?

Accepted Answer

A)   $0
B)   $432
C)   $1,008
D)   $1,440

Question 17

Jenny is an employee and she is based in the company's Melbourne office and lives in a three-bedroom house in Melbourne, which is under her name. In order to complete a project, Jenny was seconded to the Sydney office for 18 months starting on 1 April 2019 and her husband and child (aged 8 years old) moved with her for the whole period. During the 2019-2020 FBT year, the company provided Jenny with a LAFHA for $860 per week, consisting of $560 per week for accommodation and $300 per week for food. Jenny made a declaration for living away from home to her company, provided the required documentary evidence to show that she spent at least $560 per week for the rental but she did not substantiate the food expenditure as the amount that she actually spent on food is less than the Commissioner's reasonable food amount ($472). What is the taxable value of the LAFHA FBT for the company?

Accepted Answer

The answer of Jenny is an employee and she is...

Question 18

Which of the following would not involve an application of the otherwise deductible rule?

Accepted Answer

A)   A loan provided by an employer to an employee at a lower rate than the notional interest rate where the loan is partly or wholly used for income producing purposes
B)   The reimbursement of a telephone expense by an employer to an employee where the telephone was partly or wholly used for work related purposes
C)   The payment by an employer to an employee of the employee's work related protective clothing expenses
D)   The payment by an employer of an employee's children's school fees

Question 19

If BZ Engineers provides its two employees with $460 worth of protective clothing (each), for no cost to each employee, for use only at work, during the FBT year ended 31 March 2020, what would the taxable value of this external property fringe benefit be?

Accepted Answer

A)   $920
B)   Nil.
C)   $460
D)   $690

Question 20

Furniture Kings Ltd manufacture various furniture items and to reward employees they allow employees to purchase up to three furniture items per year at 50% of the selling price. Calculate the company's FBT liability if Ann purchases 3 items @ $500 each during the FBT year ended 31 March 2020?

Accepted Answer

A)   $733.27
B)   $750
C)   $2,250
D)   $3,000

Exam 5: Fringe Benefits Tax