Master Tax Supplementary CA Documents

Transcription

1 Master Tax Supplementary CA Documents In this file preview: - Preview of comprehensive list of assessable and deductable items - Top 1: Australian Tax Fundamentals Notes - Fringe Benefits categories There are multiple documents in this file which can be accessed once downloaded

2 Assessable and deductible items Item Comment Reference Accrued expenses Generally deductible when invoiced. Invoice s.8-1 may be dated after year end but if invoice indicates the service was consumed before year end, it will be incurred for tax purposes and therefore be deductible. Accrued leave transfer payment assessability Assessable when shift employee from one employer to another and new employer receives a payment from the old employer s.15-5 Advertising Ordinary business expense s.8-1 Allowances connected with Allowances other than a living away from employment home allowance are assessable s s.26(e) 1936 Annual leave, LSL (deductibility) Attributed income Audit fees When expenses are incurred are deductible for person providing allowance Deductible when paid. Accrued leave/lsl is not deductible. Amounts paid from income previously attributed to an Australian taxpayer under the CFC rules are exempt is classified as nonassessable non-exempt income for the purposes of calculating a tax loss Deductible when paid unless contract in place specifying that an amount of fees have been incurred (ie there is a presently existing obligation) but are to be paid at a later time i.e. accrued audit fees not deductible However, where the audit contract requires the taxpayer to pre-pay the full audit fee at start of audit, or where contract provides that the full amount of the audit fee is due on entering the contract (but auditor may accept payment by instalments) a deduction would be allowable under s.8-1 in year in which the audit commenced or contract entered into, as appropriate. s.8-1 s and Flood case s.23ai s.8-1 IT 2625

3 Awards & prizes Windfall gains from lottery or competition are non assessable Where a prize or award is won incidentally to taxpayers income producing activities or business, generally will be assessable e.g. footballer s best player award e.g. authors literary prize e.g. farmer of the year award e.g. prizes and awards to taxpayer carrying on business of horseracing Kelly v FCT Bad debts Bank charges Bill interest -Deductible when written off. Must have been: (1) brought to account as AI in current or earlier year; and (2) the debt must be bad; and (3) debt must have been written off as bad during year of income Companies: -Need to satisfy continuity of ownership from date debt incurred to when written off, or failing that, same business test. -Provisions for bad/doubtful debts are not deductible. -Bad debts recovered assessable General account keeping fees deductible to the extent incurred in producing assessable income or in carrying on a business Debits tax as above Expenses of discharging a mortgage You can deduct expenditure you incur to discharge a mortgage that you gave as security for the repayment of money you borrowed, if you used the money solely for purposes of producing assessable income. Also if borrowed to purchase property which is used to produce AI. Apportion if private % (deductible in full in year incurred) The discount (interest) on bill of exchange is deductible. If bill matures within 12 months of drawdown, the discount is deductible on a straight line basis over the term of the bill (days). Otherwise follow rules in Division 16E. s Point s case s s.20-20(3) s.8-1 s.8-1 s.25-30(1) s.8-1 & Coles Myer Finance Ltd

4 CA Program Tax module Common income and deductions items AN A TO Z OF COMMON ASSESSABLE AND DEDUCTIBLE ITEMS: This list is only a selection of some of the common issues of assessability or deductibility under Australian Income Tax Law and is not exhaustive. Only a brief outline of issues are provided in this document so you should undertake further research to obtain a greater depth of understanding. References are to the ITAA 1997 Act unless otherwise stated. Item Assessability Deductibility References Accounting profit or loss on sale of fixed asset Accounting profits are not assessable they are replaced where relevant with a capital allowance balancing adjustment amount or a capital gain/loss. Accounting losses are not deductible they are replaced where relevant with a capital allowance balancing adjustment amount or a capital gain/loss. Division 40 Part 3-1 Accrued expenses Generally deductible once invoice received. Invoice may be dated after year-end but if the client was definitely committed to the expenditure before yearend, generally it will be incurred for tax purposes and therefore deductible. Section 8-1 Advance expenditure (see also prepayments) Amounts of excluded expenditure deducted for tax purposes before recognised in income statement will need to be added back when the amount is included in the income statement. Prepayments of amounts for things to be done in the future. Broadly, the total expenditure must be matched to an eligible service period (ESP) and is apportioned on a daily basis only the part apportioned to the ESP within the income year is deductible (except certain excluded expenditure e.g. salary and wages). Also note different rules for small business entity taxpayers. Section 82KZM ITAA 1936 Advertising Ordinary business expense deductible. Section 8-1 Allowances connected with employment Allowances other than a living away from home allowance are assessable when received Deductible when incurred by a business Section of 3

5 CA Program Tax module Common income and deductions items Item Assessability Deductibility References Annual leave Assessable when received by the individual taxpayer but may be subject to a tax offset e.g. when genuine redundancy Deductible when incurred by a business (when paid a provision is not sufficient) Section 83-10(2) Section & Flood case Attributable income Assessable when attributed. Where foreign dividends are paid from income previously attributed to an Australian taxpayer under the CFC rules they are non-assessable, nonexempt (NANE) but a foreign tax credit or offset is still available Generally deductions incurred in respect of deriving non-assessable, non-exempt income will be nondeductible. However debt deductions (s ) relating to this non-assessable non-exempt income are still deductible Sections 456 and 23AI ITAA 1936 Sections 8-1 and Bad debts Note that the accounting terminology refers to bad debts as impairment losses. They arise from uncollectible debts and are expensed in an allowance account in the income statement Impairment losses reversed in respect of uncollectible debts previously written off and now recovered are movements in the allowance account in the income statement. They are assessable. Deductible when written off as long as the amount (e.g. original sale proceeds) has been included in assessable income. An increase in allowance account other than for uncollectible debts written off, representing impairment losses is not deductible (nor are decreases assessable). NB: It is the GST exclusive amount that is deductible - the element of GST can be claimed back from the ATO when the uncollectible (bad) debt has been outstanding for more than 12 months. Section Section 20-20(3) Subdivision 165-C NB: Special rules similar to the loss rules - need to satisfy continuity of ownership from date debt incurred to when written off, or failing that, same business test. 2 of 3

6 CA Program Tax module Common income and deductions items Bill interest Black hole expenses / capital business related costs The discount (interest) on bill of exchange is deductible. If bill matures within 12 months of drawdown, the discount is deductible in the properly referable periods generally on a straight line basis over the term of the bill. Otherwise follow rules in Part III, Division 16E ITAA Broadly, the UCA rules provide deductibility over 5 years on a straight-line basis for business related expenditure not deductible elsewhere in relation to a current business, past business or proposed business. 20% of the expenditure is deductible in the year it is incurred regardless of when in the income year it is incurred. Section 8-1 & Coles Myer Finance Ltd Section Bonuses Ordinary income assessable Deductible when incurred Section 6-5(1) or 15-2 Merrill Lynch case Borrowing costs For example, loan fees, legal fees re borrowings are deductible on a daily basis over the lesser of the life of the loan, or 5 years - where borrowing for income producing purposes. Section Branch income Active income derived by a foreign branch of an Australian company is non-assessable, non-exempt income. Expenses incurred in respect of deriving nonassessable, non-exempt income will be non-deductible as earning non-assessable, non-exempt income Section 23AH ITAA 1936 and s Regs 3 of 3

7 AUSTRALIAN TAX FUNDAMENTALS SUB TOPIC PARA Text PLS ACTIVITY Calculating tax liability Tax payable/refundable = (Taxable income x Tax rate) - Tax offsets 4-10 Taxable income = assessable income - Deductions 4-15 Tax loss = Deductions - Assessable Income - Net exempt income Assessable Income (div 6) Consists of two parts: 1) Ordinary income - income according the ordinary concepts Refer Table a) Constructive Reciept Rule: dealt with on instruction taken to be derived. Have to have earned before derivation. 6-5(4) ) Statutory income - income included as part of assessable income by a specific provision in income tax legislation 6-10 If an amount is both ordinary and statutory income, it will only be included once (usually as statutory income) ) Exempt income, and NANE income are exempt Deductions (div 8) Consist of two parts: 1) General deductions 8-1 2) Specific deductions 8-5 If a deduction can be classified as both general and specific, it can only be claimed under the most appropriate (usually specific) 8-10 Tax offsets (div 13) Residence and source of incom Residents are taxed on all sources of income 6-5(2), 6-10(4) MCES 1 Non-residents are only taxed on Australian-sourced income 6-5(3), 6-10(5) Therefore, must consider both components: Residency, and source of income Residency Individual 1) Resides test; 2) Domicile test; 3) 'More than 183 days' test; 4) Membership of a Commonwealth Government superannuation scheme ITAA 36, s6(1) WE 1.1 Company 1) 1st statutory test; it is incorporated in Australia; or ITAA 36, s6(1) ) 2nd statutory test; it carries on it's business in Australia and had either: a) its central management and control in Aus; or b) its voting power is in Aus 1.1 i) The mere fact that central management and control of the company is in Australia is not sufficient to say it is carrying on business in Aus. TR 2004/ ii) This is opposed to the findings in Malayan Shipping Co Limited v FCT. 1.1 iii) CMC resest with directors unless great degree of director type control is performed by non-directors. Esquire Nominees Trust Depends on there evidence of the trustee, or the central management and control of the trust ITAA 36, s95(2) Super fund Definition in s (2) s (2) Partnership Not relevant Source of income Refer to table 1-10 i) Employment services performed by a sports person in Australia will be sourced in Australia FCT v Efstathakis WE 1.1 ii) Income sourced where the place of contract and place of payment is overseas, will be sourced overseas FCT v French; FCT v Mitchum WE 1.1 Differences: 1) tax rates for individuals; 2) Medicare levy rules; 3) CGT provisions; 4) PAYG rules; 5) Company tax concessions Assessable income mining when income is derived Cash vs accruals basis 2-2 1) Cash method should be used by business when: Carden's Case i) The income is derived from the provision of services using their personal professional knowledge and skills FCT v Firstenberg; FCT v Dunn 2) Accruals method should be used by business when: TR 98/1 2-3 i) In all other circumstances: the structure of the firm derives the majority of income, not the skills of a few people Henderson v FCT MC1-6A ii) Whenever selling trading stock (products) J Rowe and Son Pty Ltd v FC of T 3) When does income under accruals method become assessable i) Fees paid in advance: derived as they are earned, not when paid up front Arthur Murray (NSW) Pty Ltd v FCT WE 1.2 Not assessable if services yet to be provided, refundable or unearned income. ii) Trading goods sold on credit terms: derived when the goods are sold and the debt is created J Rowe & Son Pty Ltd v FCT WE 1.2 iii) Dividends received: derived when paid ITA 39 44(1) WE 1.2 iv) Rebates - timing issues arise (apply accruals bases) PLS 3.2(inc)

8 - Refer to table summary on page 14 Types of ordinary income Amounts received are more likely to be income when they are 1) Arising from employment or services: Amounts incidental to earning income e.g. tips for a waiter: Kelly v FCT; Scott v FCT Income 2) Arising from carrying on a business: e.g.proceeds from selling trading stock is income, only if carrying on a business Income 3) Income is typically periodic, recurrent or regular: FCT vs Dixon. An isolated transaction is more likely to be capital in nature Income 4) Received from the use of property: e.g. rent, interest, dividends, royalties: Einser vs Macomber (trees and fruits analogy) Income 5) Isolated transaction: may be income, if received in the course of carrying on a business: FCT v Myer Emporium Income 6) Compensation for loss of trading stock: FCT vs Wade Income WE 1.3 7) Compensation for the loss of income: Liftronic vs FCT Income WE 1.3 i) Compensation for the loss of a right to earn income (loss of a customer contract) a) Does not prevent business from carrying on with other customers Heavy Minerals Pty Ltd v FCT Income b) Severly impacts ability to continue on running a business Van Den Berghs Ltd v Clark (1935) AC 431 Capital 8) Lease incentive Cooling Montgomery and O'Connel; IT 2631 Income 3-9 PLS 3.3(inc) a) Non-cash lease incentive: If otherwise deducitble (e.g. rent free period) Not Income 3-10 extra 4 9) Assignment of lump-sum interest FCT v Myer Emporium Income PLS 3.3(inc) 10) Contructive receipts. If someone else receives your money on you rbehalf. Brent v FCT Income 6-5(4) 2-4 Amount received are not income when 1) It is capital in nature (see below) Not income 2) Personal gifts: Personal gifts are not income, unless it is a product of employment: Scott vs FCT, Hayes vs FCT Not income 3) It is a windfall gain (e.g. lottery winnings) Not income 4) It was received from conducting a hobby Not income 5) The mutuality principal applies: i) Members contribute to a common fund, and the monies returned to the contributors when the fund is wound up Bohemians Club v Acting FCT Not income ii) Unless, members are trading with a view to make profits FCT v Australian Music Traders Association Income 6) Amounts received in advance Arthur Murray v FCT Not income 2-4 Income vs capital An amount is more likely to be capital when it is 2-4 1) Gain in relation to a one-off or non-recurring event: Californian Oil Products Limited vs FCT Capital WE 1.3 2) Amount received for a restrictive covenant, or sterilisation of an asset: Dickenson vs FCT Capital 3) Gain resulting from merely realising an investment in the most advantageous way: Scottish Mining Co Limited vs FCT Capital FCT vs Whitfords Beach Pty Ltd Income 4) Transaction occurring outside ordinary course of business and not entered into with the intention of making a profit: Westfield vs FCT Capital was entered into with the intention of making a profit: FCT vs Myer Emporium Income 5) Amount received as lump-sum compensation in relation to an asset: McLaurin vs FCT Capital Non-cash business benefits 1) Assuming the benefit would otherwise be of an income nature, NCBB treated as if convertible to cash, and is income FCT v Cooke & Sherden 21A(1) PLS 6.1C Net non cash business benefit < $300 exempt 23L(2) Statutory Income Types of Statutory income ) Gain resulting from a profit-making undertaking i) Tax on sale of property (pre-cgt) ii) Conversely, a loss is deductible ) Disposal of a leased car for a profit Exam 3(2B) i) Assessable amount is the lower of the total lease payments that were deducted, and notional depreciation for the lease period ) Other categories of statutory income. THESE WILL BE COVERED IN OTHER UNITS. TICK OFF, ONCE COVERED pg Exempt Income Income that is either classified as ordinary or statutory income, but is exempt from income tax 6-20 i) Entities that are exempt, regardless of the type of income 11-5 ii) Examples of exempt income Excluded from assessable income in current year, however, is taken into account when calculating: i) A current year tax loss ii) A prior year tax loss that can be claimed in the current year 36-15

9 NANE Income Not assessable, and not exempt. Which means it is not taken into account for the two factors above 6-23 i) GST collected is NANE 17-5 ii) Non-portfolio dividends from a foreign country are NANE (if it's to a trust, it is assessable income) 23AJ iii) Income derived by a taxpayer by way of FB is NANE 23L(1) iv) For a foreign resident: Dividends (subject to withholding tax) 128D PLS 13.1 v) GST collected NANE 17-5(a) Deductions General deductions Positive limbs 1) It is incurred in gaining or producing your assessable income- Amalagamated Zinc 8-1(1)(a) i) Establishing a nexus between the expenditure and the taxpayer's income-producing activity FCT v Smith ii) Criteria as to whether the expense has been 'incurred' page 27 a) If the expense has been paid, more likely to have been incurred FCT v Lau deductible b) Present existing liability to pay a sum of money FCT v Citylink Melbourne deductible c) Liability can be reasonably estimated, even if exact amount cannot be precisely determined ANZ Banking Group v FCT deductible d) Where there is genuine dispute of a liability's existence, not incurred Softwood Pulp & Paper v FCT not deductible iii) Interest expense. Deductible if: WE 1.4 a) the borrowed funds have been put to an income-producing use FCT v Munro/ FCT v Roberts & Smith deductible WE 1.4 b) the purpose in borrowing the funds is relevant Fletcher v FCT deductible WE 1.4 iv) Bill discounts a) Discounts on commercial bills are allowed as a deduction on a straight-line basis Coles Myer Finance v FCT & 93/21 deductible pg 28 PLS 11.1 v) Leave provisions are not deductible - only deductible in the year in which they are incurred quiz 8 vi) Home office expenses: To the extent: Dual-purpose deductions can be apportioned Ure v FCT, Ronpibon Tin NL v FCT, TR 93/30 MCES 1 vii) Lease document expenses are deductible viii) Deductions may be reduced where payment is due to a related party ) It is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income 8-1(1)(b) 4-7 i) Indicators that help determine of a business is being carried on: FCT v Snowden & Wilson Pty Ltd TR 97/11 a) Intention to engage in business TR 97/11 b) repetition and regularity - Whitford's Beach TR 97/11 c) planned, organised and carried on a in business like manner- Ferguson V FCT TR 97/11 d) Hobby/ Recreational - Evans v FCT TR 97/11 e) profit making intention- Stone v FCT TR 97/11 f) comparable to business activity TR 97/11 g) size, scale and permanency of the activity- FCT v Walker, Thomas v FCT TR 97/11 ii) Expenditure incurred after business activity has ceased - deductions allowed Placer Pacific Management Pty Ltd v FCT, FCT v Brown, CoT v Jones deductible iii Expenditure incurred after business activity has ceased - deductions not allowed FCT v Riverside Road not deductible iv) Expenditure incurred prior to starting a business - deductions not allowed FCT v Maddalena not deductible v) Expenditure that is incurred to reduce future expenditure is deductible W Nevill & Co Ltd v FCT deductible Negative limbs 1) It is a loss or outgoing of revenue or capital in nature 8-1(2)(a) 1.3 i) Legal expenses. refer to Sun Newspapers Ltd and Associated Newspapers Ltd v FCT pg 34 a) Enduring benefit capital b) Once-and-for-all capital c) Single lump sum capital 2) It is a loss or outgoing of a private or domestic use 8-1(2)(b) i) Childcare to allow a parent to enter the workforce Lodge v FCT not deductible 1-42 ii) The cost to travel to and from work Lunney and Hayley v FCT not deductible iii) Mixture of personal and work-related expenses, i.e. home office. Expenses is apportioned Handley v FCT part deductible iv) Sunscreen, hats, and sunglasses allowed as deduction for outdoor workers Morris v FCT deductible v) Wardrobe (clothes) allowed as deduction for personal secretary to the wife of GG (to attend a variety of functions) FCT v Edwards deductible

10 vi) Protective clothing deductible s 8-1 vii) Uniforms with company's logo on it deductible div 34 viii) Special rules for companies refer pg 36 3) It is a incurred in relation to gaining or producing your exempt income, or non-assessable non-exempt income 8-1(2)(c) i) Exception: Interest deduction allowed for money borrowed from offshore subsidiaries (other side of NANE) ) A provision of this Act prevents you from deducting it 8-1(2)(d) i) Fine and penalties 26-5 ii) To ensure fairness among taxpayers iii) Eligibility criteria satisfied iv) GST recouped from government: Deduction is reduced by available input tax credit 27-5 Specific deductions 1) Repairs and Maintenance - s WE 1.5 i) A repair: Deductible 97/ MC1-5C a) Restores the asset to its original function W Thomas and Co Pty Ltd v FCT 25-10(1) b) Renews or replaces the parts of an asset, rather than the entire asset Lindsay v FCT c) Does not change the character of the asset W Thomas and Co Pty Ltd v FCT ii) Not a repair: not deductible 25-10(3) 4-20 a) The work improves the function of the asset (even if the current material is no longer relevant) FCT v Western Suburbs Cinema Div 40 b) The work will prevent future damage BP Oil Refinery (Bulver Island) Ltd v FCT c) It is an 'initial repair' - work done on a newely acquired asset, and existed at acquisition W Thomas and Co Pty Ltd v FCT Div 43 d) The work replaces the entire asset Lindsay v FCT Div 40 --> Any of these may be deductible under Div 40 (adding to the cost of a depreciating asset); or Div 43/CGT (adding to cost of building/structure e) Notional repairs: The amount it would have cost, had it been repaired instead of replaced FCT v Western Suburbs Cinema not deductible 2) Borrowing expenses - s pg 40 i) A deduction is allowed for expenditure incurred in borrowing money (e.g. legal, valuation and survey fees, loan guarantees fees, insurance) a) to the extent that the borrowed funds are used to produce assessable income ii) If the borrowing is a financial arrangement, deductible under Div 230 Div 230 iii) For total expenditure of $100 or less - in year it is incurred 25-25(6) iv) > $100, written off over the period of the loan or five years, whichever is the lesser (calculated on a daily basis) (4)-(5) example v) For a loan with a dual-purpose, the deduction is apportioned example 3) Bad debts - s25-35 For a bad debt to be deductible, it must meet the following requirements: i) There must be an existing debt deductible ii) The existing debt must be bad deductible iii) The existing debt must have previously been brought to account as assessable income deductible iv) The existing debt must have been written off as a bad debt during the income year deductible v) An allowance for doubtful debts is not deductible not deductible 4) Tax-related expenses - s 25-5 i) Expenses relating to tax affairs are deductible a) Managing tax affairs (including advice given by registered tax agent) 25-5(1)(a) --> E.g. Preparation of ITR, BAS, obtaining tax advice, attending to ATO query, disputing something with the ATO --> Expenses in relation to GST, FBT, Payroll tax, and Land tax are deductible under second positive limb (as it relates to the carrying on of a business) 8-1(1)(b) b) Must comply with an obligation imposed by commonwealth law 25-5(1)(b) c) Interest paid to ATO 25-5(1)(c) ii) Not deductible: a) Income tax payments, PAYG payments 25-5(2)(a) b) Interest on money borrowed to pay income tax, PAYG 25-5(2)(c) --> But, businesses can claim the interest as deduction 8-1(1)(b) e) Advice not given by a recognised tax adviser 25-5(2)(e) iii) GST paid to government is not deductible 27-15(1) 5) Entertainment expenses - s i) Entertainment deduction is denied unless it falls under one of the exceptions in Subdivision 32-B (however, entertainment allowance is deductible) 32-5

11 a) Entertainment = entertainment by way of food, drink or recreation or accommodation or travel to do with providing entertainment 32-10(1) b) Expense that gives rise to a 'fringe benefit' is deductible (employee portion of entertainment provided), as long as FB is not an exempt FB > Not deductible if it is not a Fringe benefit 32-5 b) Other examples that give rise to deductibility of entertainment expenses pg ii) Refer to "Why, What, When and Where" test to determine whether an expense is classified as entertainment TR 97/17 pg 42 6) Prepayments pg 45 i) If a prepayment satisfies the definition of excluded expenditure (82 KZL), then the prepaid expense is excluded from the prepayment rules and is deductible in full, 82 KZL 1-52 regardless of the taxpayer a) E.g. <$1,000, salary and wages, required by law, deductible under another provision, paid under a service contract, individual no SBE <12 months 82 KZL pg 44 ii) For all other prepayments: a) SBE: SBE taxpayer needs to consider the prepayment rules in 82 KZM --> Deductible upfront if the period to which the prepayment relates is not more than 12 months, and ends in the following income year 82 KZM --> IF not, spread out over the period to which the prepayment relates 82 KZM b) Non-SBE: spread out over the period to which the prepayment relates (to a maximum of 10 years) 82KZMD ) Other specific deductions. THESE WILL BE COVERED IN OTHER UNITS. TICK OFF, ONCE COVERED PAGE 45 i) Additional superannuation contributions are deductible ii) Memberships (e.g. golf memberships). But, will attract FBT (residual FB) iii) Deductibility of bonuses: a) Deduction not allowed until the income year in which the company has definitively committed itself to the payment Merrill Lynch International v Ors PLS 3.4(d) b) To make it deductible in current year, employees have to be notified on the bonus to be 'paid' and have approval of directors iv) expenditure incurred in the preparation, registration and stamping of a lease for a property that will be used to produce income Substantiation of expenses 1) Work expenses i) Claims less than $300; Laundry expenses up to $150; Reasonable claims against domestic travel allowances and overtime meal allowances Not required 2) Car expenses i) Cents per kilometre method: can only use for first 5,000 kilometres 28-25(1) pg a) No substantiation required ii) 12% of original value method: Use if kilometres > 5,000. Refer to calculation a) No substantiation required iii) One-third of actual expenses method: Use if kilometres > 5, a) Substantiation required iv) Log book or actual cost: Multiply car expenses by the business percentage 28-90(3) 1.4 a) Substantiation required ) Business travel expenses i) Absent from home for less than six nights: Written evidence of expenditure ii) Absent from home for more than six nights: Written evidence of expenditure and travel diary PAYG process 1.2 PAYG withholding 1) When does PAYG withholding apply Quiz 9 PAYG instalments 1) From businesses, super funds, individual who are not employees (income > $2,000) 2) There are new laws that are being introduced to make large companies pay monthly instead of quarterly 3) PAYG instalments amounts are calculated using either: i) Instalment income method ii) GDP-adjusted notional tax method 4) BAS: required to lodge monthly if annual turnover > $20 million

12 FRINGE BENEFITS Type Explanation Taxable Value Section FBTAA Car Fringe Benefits Car is held by employee and Statutory Formula (s.9) s.7(1) 2 available for private use [(base value x stat. fraction)x(no. days avail./365)] - recipient contributions Debt Waiver Fringe Benefits Loan Fringe Benefits Expense payment fringe benefits Living away from home allowance (LAFHA) Meal entertainment Employees debt to employer is waived Loan with IR < statutory rate (5.95%) Employers pays for third party expenses of employee, or reimburses employee for expenses incurred Compensation for expenses for LAFH Food or drink for purpose of facilitating entertainment Car parking fringe benefits - More than 4hrs (7am - 7pm) - On employer business premises Property fringe benefits within 1km of car park that charges > $8.26 per hour Provides employee with property for free or at discount Operating Cost (s.10) [(total operating costs x (100% - Business percentage) - recipient payment)] Amount of repayment waived (s.15) s.14 3 Interest accrued at stat. rate less actual interest accrued (s.18) s.16 4 External (s.43): $amount - recipient contribution In-house (property only) (s.42): Refer page 4-27 Residual benefit (services): (75% x lowest price to public) - recip. conts. Otherwise deductible rule (s.24) may apply. $1000 deduction for in-house benefits (s.62) $amount of LAFHA - Exempt components Exempt components: LAFHA max 12 months, employee maintains normal residence for immediate use/enjoyment Amount of exempt food: =amount paid - amount incurred at home 50/50 Split: 50% x total meal expenses (s.37ba) 12 week register (s.37cb): $total x register % (register % = total meal FB/total meal entertain.) 12 week record: $total val. Car park benefits x (52/12) x (no. days of benefit/366) Statutory method: Daily rate amount x (no. days availability related to space/366) x 228 Exemptions: Disabled person, religious, NFP (s.58g), SBE with <$10m preceding income year and parking benefit not provided at commercial parking station (s.59g) External (s.43): $amount - recipient contribution In-house (property only) (s.42): Refer page 4-27 Residual benefit (services): (75% x lowest price to public) - recip. conts. s.20 5 s.30 7 Div 9A s.37ad s.39a 9A 10A s Residual fringe benefits Any benefit not covered by Property fringe benefit Otherwise deductible rule (s.44) may apply. $1000 deduction for in-house benefits (s.62) Food and drink provided and consumed on a workday on employer premises (s.41) As above Exempt: employee transport where employers are public transport providers, recreational/childcare facilities loacted on premises (e.g. company gym), use of property located on company premises (e.g. vending machine) s.45, 50, Otherwise deductible rule s.24