Determine whether the following benefits are fringe benefits or exempt
fringe benefits and, where...

Question

Determine whether the following benefits are fringe benefits or exempt
fringe benefits and, where applicable, the relevant category of the fringe
benefits. Provide reasons for your answer:
a)
Kerry is
an employee of the university. She is provided with 10 gifts vouchers worth $50
each for use at the local supermarket as a Christmas gift. Advice Kerry and the
University of the tax consequences of this transactions 
b)
Sorella
borrowed $10,000 from her employer on 4 September 2011 as her home was damaged
in a freak storm. The loan was provided at no interest. On 15 January 2012, her
employer informed sorella that she was only required to repay half the loan.
Advice sorella and her employer of the tax consequence of the transactions.
c)
Penny is employed
as a secretary by law firm. As part of her remuneration package, the firm agree
to provide her with legal services in relation to her divorce a 60% discount to
its normal rates. The firm also purchase plasma TV set for $5,500(inclusive of
GST), which it gives to Penny. Explain how the taxable value of these fringe
benefits will be calculated.12 hundred words12

Robert · Accepted Answer

a) In the given case, Kerry is an employee of the university and is given a Christmas gift of 
10 gift vouchers worth $ 50 each for being used at the local supermarket. Now the issue in 
question is whether this gift or benefit provided to Kerry is a fringe benefit or an exempt 
fringe benefit.  
A gift is a voluntary payment made in gratitude and without expectation of anything in return. 
Certain receipts are not assessable income for tax purposes and these are the non-assessable 
non-exempt income. As per section 6-23 of ITAA 1997, an amount of ordinary income or 
statutory income is non-assessable non-exempt income if the Act states this to be that it 
cannot be called assessable income and it cannot be called exempt income. Section 11-55 of 
the act lays down the list of all such non-assessable non-exempt income. This list includes all 
non-cash benefits and all fringe benefits. Sec 136(1) of the FBTAA says that a fringe benefit 
is a benefit given during a particular tax year by an employer or an associate of employer, to 
an employee or an associate of employee and excludes certain payments specifically 
mentioned in the section. 
Section 58P (1) (f) says that any benefit which is minor and under $ 300 in value, and not 
frequently provided by the employer is to be classified as a minor benefit which is exempt 
from fringe benefits tax. (Brett, 2009)  
On application of the above stated law, it is seen that the benefit can be called fringe benefit 
on the basis that it is provided by the employer to the employee in the given tax year. Now, 
when we apply the provisions of section 58P to the given case and the threshold limit, it is 
seen that the gift contains $ 500 for the 10 vouchers. Under section 58P, it is assumed that it 
is provided every Christmas, and hence, is provided on a regular basis. Hence, the gift of 10 
gift vouchers provided to Kerry by the university is found to be a fringe benefit.  
b) As per the given problem, Sorella has taken a loan of $ 10,000 from her employer on 4
th
 
September 2011.

Determine whether the following benefits are fringe benefits or exempt fringe benefits and, where applicable, the relevant category of the fringe benefits. Provide reasons for your answer: a) Kerry...

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