vita accepts an offer of employment made by Quality Lawyers Pty Ltd (Quality) to be their new marketing manager.
On 1 April 2017 Quality made an interest free loan of $690,000 to Evita. She used $80,000 to buy interest bearing government bonds and the balance ($610,000) to pay off the mortgage on her father’s home. Quality is not entitled to claim the input tax credit for GST purposes.
Required: Advise Quality of the fringe benefits tax payable, if any, (rounded to the nearest dollar) for the FBT year ended 31 March 2018
It is not mentioned the relevant case is belongs to which country ?
There are various acts and rules plays for FBT taxation in every country.
So am solving this case using Australia and India. If you have any query just comment, I will surely response. (It’s request please thumbs up the answer)
INDIA
The aggregate amount of FBT loan is treated as loan is taken from schedule bank ( state bank of India ) and the rate of interest of such banks will be tested as a part of salary and tax will calculate accordingly as per the rate prescribed by income tax act.
(Assume rate of interest of State bank of India is 10% )
$610,000 *10/100= $61,000 (It’s a part of salary )
Australia
The amount received by Evita by Quality is $680,000,
1st step - it should be grossed up at 1.8868 ( not entitled to gst input tax credit and FBT avail on and after 1st April 2017)
The grossed up value is $1,283,024.
2nd step- apply FBT rate i.e. 47%
47% of $1,283,024 is $603,021.
This is the total FBT rate.
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