Golden Spring Publish and employ benefit - MyAssignmenthelp.com

Question: Discuss about the Golden Spring Publish and employ benefit. Answer: In treatment of fringe benefits during taxation, the company pays taxes on behalf of the employee or an associate of the employee eg a family member in the place of wages and salaries. This is very separate to income tax and is the taxable value of fringe benefits. In this case, Charlie is an employee of Shiny Homes Pty Ltd(Shiny Homes) and works as an agent in its real estate segment. He has been given several benefits which are taxable including a 4 wheel sedan which is valued at $70,000. In fringe benefits the taxable amount that is attributable to Charlie is in case the car was used partly for personal engagements or private use. In this case, Charlie uses 70% of the car for official use and the remaining 30% is used in private engagements (Engdahl, 2011). The Law 27/2014, of November 27, of the Corporation Tax (LIS), has supposed a radical change in the treatment of the double taxation of fringe and participation of benefits, since it has entailed that, for the tax periods initiated on 1 June 2016 to 30 June 2017 (Langbein et al., n.d.). For taxation purposes, the following are to be taxed on the side of the shiny homes. The cost used by Charlie on 50,000 kilometers. The remaining 30,000 will be taxed on Charlie as it was for personal use. The petrol and oil per month will cost a total of $ 2000. This will be multiplied by the number of months in the calendar year which are 12 months. This is equal to $24,000. However, Charlie had maintained a logbook for 3 months or 12 weeks which is presumably for personal use of the vehicle. Therefore the taxable benefit on the car is only 9 months. The repairs and maintenance per month is $ 3,500. Therefore the total repairs and maintenance will be multiplied by 12 months. The registration per annum is $ 240 while insurance per annum were $ 960. All these expenses were incurred by the employer shines homes (Fringe benefit tax guide, 2010). Shine Homes taxable benefits Taxable item Amount $ Amount $ Petrol 9 months 18000 Repairs and maintenance-12 months 42,000 Registration 240 insurance 960 Parking fee( 200*52) 10400 Total 71,600 For Charlie the following are the taxable deductions that he will have to face. 30 % of all the expenses which was for private use $ 1000, car hire which the company paid to allow Charlie and his wife Deborah to go on a honeymoon in gold coast. Accommodation for the honeymoon which was paid by Shine homes amounting to $ 3000. Charlies taxable benefits Taxable item Amount$ Amount$ Car hire 1000 accommodation 3000 Total taxable benefit 4000 For taxable benefits, all work related costs should be taxed to the company while Charlies personal and private use should be taxed on Charlies (Mellon, 2016). The parameters or essential requirements for the deduction for economic double international taxation for benefits and participation in benefits paid by a company. In the case of distribution of reserves, the designation contained in the partner agreement will be considered, the last amounts allocated to said reserves being understood as applied. The deductible items include business expenses, charitable donations to charities registered in Australia and tax payments of complementary benefits (Mellon, 2016). Tax benefits are offered to Australian tax residents, as well as to dependents. Advice in regard to income tax consequences to Allan In Australia, no Capital gain tax (CGT) is paid for a home that one lives in. In this Case, Allan and Betty will not pay tax for money received when they sold their house in Melbourne. They also, cannot claim any deduction in income tax for cost associated with buying the country house sitting on a 10 hectare farm in Victoria (this is under the main residence exemption). If the house was a holiday house, it would be subjected to capital gain tax (Barkoczy, n.d.). However, the fee paid to both Allan and Betty for providing professional services in their respective areas of expertise has to be declared and taxed. Gifts received as part of a income earned when providing a professional service as an employee or a contractor are taxed. Therefore, the wine value of $360 from the clients will be taxed. Distinguishing between hobby and Business in taxation When determining if an activity is a business or a hobby, the following factors need to be considered: does the activity have a registered business name, or has it obtained an ABN. For a business the owner intends to make a profit, he also carries the activity in an organized, planned and business-like manner (Australian master tax guide, n.d.). For example, keeping records, having a separate bank account, operating in another business premise, having qualifications and licenses e.t.c. Another factor to consider is if a similar type of activity is repeated. On the other hand, hobbies do not have any additional tax or reporting obligations. Also, an activity that is considered to be a hobby does not have an ABN. The most relevant case law is IRs VS Robert Miller, where the court was to determine is operating a horse business was a hobby or business. Tax implication to Betty and Allan Allan and Betty have been practicing and enjoying gardening and have been planting vegetables and grape vines as a hobby. At first, when they have been practicing farming as a hobby, they had no obligation to report and pay taxes. However, after Betty opened a stall at Newtown market, the tax implication of this is that she has to pay income tax for the proceeds of the marmalade sales (Coleman et al., 2013). This will increase the tax payable. Allan will also pay taxes from the proceeds of supplies that he regularly takes to some retailers in the town. Even if they do not keep records, they are required to pay the taxes of $500-$600 gross income they receive each month. Barter trade transaction is assessable and is deductible for income tax purposes. When exchange happens there is a liability for tax, which includes GST (Coleman et al., 2013). Advice to participants of the barter trade Suzie will have to pay GST tax for services provides through the barter trade system. The value of the goods exchanged will be assessed in terms of the barts, and the value of the goods or exchange is then taxed. This applies to all other participants including Betty and Allan (Deutsch, 2008). References Australian master tax guide. (n.d.). . Barkoczy, S. (n.d.).Australian tax casebook. Coleman, C., Hart, G., Bondfield, B., McKerchar, M., McLaren, J., Sadiq, K. and Ting, A. (2013).Australian tax analysis. Pyrmont, N.S.W.: Thomson Reuters (Professional) Australia Limited. Deutsch, R. (2008).Australian tax handbook. Pyrmont, N.S.W.: Thomson. Engdahl, S. (2011).Taxation. Farmington Hills, MI: Greenhaven Press. Fringe benefit tax guide. (2010). [Wellington, N.Z.]: Inland Revenue. Langbein, J., Pratt, D., Stabile, S. and Stumpff, A. (n.d.).Pension and employee benefit law. Mellon, A. (2016).Taxation. San Francisco: Golden Springs Publishing.