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Individual assignment

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Answered Same Day May 25, 2020 HA3042

Solution

Shikha answered on May 28 2020
139 Votes
Answer 1-
Income from personal exertion is the income received by an individual in form of salaries, wages, fees, allowances etc. for any services rendered. In this case Hillary is paid a compensation for rendering her services in form of writing the book and selling the manuscript and photographs. So these incomes can be considered as Income from personal exertion. As company approached Hillary to write the story for them, it would be considered as a work or job offered by the company and income paid would be considered as remuneration paid towards the services rendered by Hillary.
Personal Services incomes are those incomes which an individual earns mainly from their efforts and skill. If Hillary took efforts in writing the book herself and then selling it at later date, in this case it was skills and efforts of Hillary which made her earn that income. So we could have treated that income as PSI (Personal Services Income) rather than Income from personal Exertion. For a income to be considered as personal services income, it is must that at least 50% or more of the income is result from individuals skill and efforts, which stands true in Hillary case.
Answer 2 –
Fringe benefit Tax is the tax which is paid by employers on all the services or perks offered to its employees. In this case Eric offered his employee to use car for personal use and hence Eric is liable to pay fringe benefit tax. This is separate than income tax and it is calculated on the taxable value of fringe benefits.
Statutory Formula to calculate Taxable value of Car Fringe benefit –
Base Value of car * Statutory Fraction * No of days car is provided    · Recipient Contribution
Number of days in the yea
Here,
Base Value of Car     = $50,000
Statutory Fraction      = 20% (After 1st April 2014, 20% is the flat rate i
espective of number of km travelled)
Days car travelled      = 183
Recipient’s Contribution = $1000
So Taxable Value is =
50000 * 20 * 183    · 1000
365
Hence Taxable Value of Car Fringe Benefit is $...
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