Fringe Benefit Tax

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Category: Business and Industry

Date Submitted: 09/17/2012 09:26 PM

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The purpose of this essay is to evaluate the suggestion given by the union spokeswoman which would be considered as an effective way to avoid losing the family tax benefit B. However, this may not work in some cases. It will provide a description about the various contents of adjusted taxable income by referring to the Australian family assistance guide. Also illustrating how the fringe benefits are adjusted to the taxable income and giving reasons why it is been used in some situations.

Main body

Adjusted fringe benefit

According to the situation given below, employees prefer to receive $150000 plus non-cash benefits from their employer rather than a ordinary payroll over $160000. The former amount paid is the taxable income, those non-cash benefits should be treated as amount of fringe benefits which would be adjusted to employee’s final taxable income (3.2.3 Adjusted Fringe Benefits,2011). Pursuant to family assistance guide, as a result of employees sacrificing an amount of their cash salary, fringe benefits are paid as part of their salary package with the value of that amount. For example, the fringe benefits can be recognized in many different forms such as leasing of vehicle, housing assistance, and family tax benefit (FTB) and child care benefit (CCB) (Fringe Benefits Tax Assessment ACT 1986). The adjusted fringe benefits equal to the reportable fringe benefits multiple by 0.535= (1-FBT rate) (3.2.3 Adjusted Fringe Benefits, 2011). For example: Tom has only received annual train ticket ($1300) and private health funds ($2000) as fringe benefits from his employers. The amounts on his payment summaries are giving a total reportable amount of $3300. Tom's adjusted fringe benefits = $3300 x (1 - 0.465) = $1765.5. Furthermore, the total adjusted tax income is the sum of the taxable income, a value of adjusted fringe benefit, target foreign income, total net investment loss if any, tax free pension and reportable superannuation contributions...