Instructions: 1. This assignment is to be submitted in accordance with assessment policy stated in the Subject Outline and Student Handbook. 2. It is the responsibility of the student who is...

Question 1
a) According to the facts of the case, Ke
y is an employee of the university. The university
has given her 10 gift vouchers worth $ 50 each and these can be used at the local
supermarket. These vouchers are given to her as a Christmas gift. The issue to be considered
is the nature and treatment of this gift to Ke
y – that is whether it is a fringe benefit or an
exempt fringe benefit.
A gift is a transfer of money, property or any other thing of value, where such transfer is
made without expectation of any reciprocity of any kind. This is unlike a receipt which is for
the purpose of a compensation received for services rendered or goods sold. This may be
income according to ordinary sources or an income recognised by the law. All such ordinary
income and statutory income are subject to tax under the ITAA 1997. However, certain
eceipts are not subject to payment of tax these are called the non-assessable non-exempt
income per the provisions of section 6-23 of ITAA 1997. Such non-assessable non-exempt
incomes are listed in section 11-55 and this consist of all non-cash benefits and all fringe
enefits.
We know that a fringe benefit is a benefit or an advantage of value provided during a tax year
y an employer or an associate of employer, to an employee or an associate of employee and
excludes certain payments specifically mentioned in the section. ( Sec 136(1) of the FBTAAT
1986)
In order to decide whether it is a taxable fringe benefit or an exempt fringe benefit, it needs to
e seen whether the benefit is minor and under $ 300 in value, and not frequently provided by
the employer; in which case it is to be categorised as a minor benefit which is exempt from
fringe benefits tax. (Brett, 2009) Moreover, Section 58P (1) (f) requires that the uniformity or
otherwise of the benefits must also be considered for the application of the provisions of this
section.
When we apply the above stated law to the given problem, it is seen that although the benefit
of 10 gift vouchers is given out as Christmas gift to Ke
y, but it is given because of the
employer-employee relationship. It is neither ordinary income nor statutory income. But, on
this basis, it can be called a fringe benefit. Also, on application of section 58P to the given
case and the threshold limit, it is seen that the amount of gift of $500 through 10 vouchers of
$ 50 each, is above the exempt fringe benefit limit of $300. Moreover, it may be assumed that
the gift is provided regularly, every Christmas. Thus, we conclude that the gift of 10 gift
vouchers provided to Ke
y by the university is found to be a fringe benefit.
) As per the given problem, Sorella took a loan of $ 10,000 from her employer on 4
th

September 2011. Her home was damaged in a freak storm and she needed the sum to ca
y
out repairs for same. Her employer gave her the loan with the benefit that she did not have to
pay any interest on it. Again, on 15
th
January 2012, she was informed by her employer that
she was required to repay only half of the said loan. We need to determine the nature of this
enefit provided to Sorella by her employer – that is whether it is a fringe benefit, or an
exempt fringe benefit. Further, we need to determine the tax consequences of this transaction
to Sorella and her employer. ...