Reference no: EM133062497

Question 1. Determine whether the following benefits are fringe benefits or exempt fringe benefits and, where applicable, the relevant category of fringe benefit. Provide reasons for your answer:

(a) Payment to employee for the estimated cost of the employee's home phone bill as the
employee sometimes has to use the home phone for work purposes.
(b) Provision of accommodation at the family home to a child who is over 21 and works in the family business.
(c) Payment of employee's superannuation contribution by the employer to a complying superannuation fund.
(d) Loan by Company X to one of its directors, Rupert, who is also a shareholder in the company.
The company's rules do not permit loans to directors.
(e) Payment of taxi fare by employer for employee to travel home after working late.
(f) Flowers sent to a sick employee. The flowers cost $75.
(g) Provision of a car for an employee's private use, including payment of all fuel costs by the
employer.
(h) Provision of sandwiches at a lunchtime seminar held at the employer's premises.
(i) Provision of an all-expenses-paid holiday to an employee who has had to work every weekend for the last six months.
(j) Provision of two laptop computers to an employee who regularly attends clients' premises.

Question 2. Jenny is an employee of the university. She is provided with 10 gift vouchers worth $50 each for use at the local supermarket as a Christmas gift. Advise Jenny and the university of the tax consequences of this transaction.

Question 3. Robert borrowed $10,000 from his employer on 4 September 2018 as his home was damaged in a freak storm. The loan was provided at no interest. On 15 January 2019, his employer informed Robert that he was only required to repay half the loan as he is a valued employee. Advise Robert and his employer of the tax consequences of this transaction.

Question 4. Alan is an employee at ABC Pty Ltd (ABC). He has negotiated the following remuneration package with ABC:
- salary of $300,000;
- payment of Alan's mobile phone bill ($220 per month, including GST). Alan is under a two- year contract whereby he is required to pay a fixed sum each month for unlimited usage of his phone. Alan uses the phone for work-related purposes only;

- payment of Alan's children's school fees ($20,000 per year). The school fees are GST free.

ABC also provided Alan with the latest mobile phone handset, which cost $2,000 (including GST).

At the end of the year ABC hosted a dinner at a local Thai restaurant for all 20 employees and their partners. The total cost of the dinner was $6,600 including GST. Assume that ABC has no other meal entertainment expenditure for the year and elects for Div 9A to apply to the provision of meal entertainment fringe benefits. You can also assume that ABC determines the taxable value of meal entertainment fringe benefits using the 50/50 split method.

(a) Advise ABC of its FBT consequences arising out of the above information, including calculation of any FBT liability, for the year ending 31 March 2019. Assume that ABC would be entitled to input tax credits in relation to any GST-inclusive acquisitions.
(b) How would your answer to (a) differ if clients of ABC also attended the end-of-year dinner?

Question 5. Advise whether the following would be considered "taxable supplies", "GST-free supplies" or input tax supplies (you may assume that the supplies are made by an entity located in Australia and registered for GST purposes and that the supplies are made for consideration in the furtherance of an enterprise):

(a) Sale of t-shirts by a retailer
(b) Sale of a new residential house by a property developer
(c) Loan set-up fees charged by a bank
(d) Sale of fresh fruit by a grocer
(e) Airline ticket from Adelaide to Perth
(f) Painting a house
(g) Sale of herbal tea by a café
(h) Home-delivered pizza with separate charges for the pizza and the delivery
(i) Airline ticket from Melbourne to London (return)
(j) Sale of an existing residential house owned as an investment property
(k) Interest on a loan to buy shares
(l) Sale of shares in an ASX listed company
(m) Sale of Australian souvenirs to purchasers located overseas

Question 6. New Developments Pty Ltd (New Developments) is a property investment and development company. Recently, New Developments purchased an old warehouse which it is converting into apartments for sale. New Developments also owns an established apartment building, which it rents out to tenants. In the course of its activities, New Developments negotiates many contracts. It engages a busy independent lawyer, Rumpole Richardson, to assist in drafting and negotiating these contracts. Rumpole Richardson has a number of clients and turns over $250,000 per year in his legal advisory business. New Developments offered to allow Rumpole Richardson to live in one of its apartments rent-free in exchange for his legal work. Rumpole Richardson agreed to this arrangement. Normally, the rent payable on the apartment would be $22,000 per annum.

Advise New Developments and Rumpole Richardson of their GST obligations and any input tax credit entitlements they may have. Assume that New Developments is registered for GST purposes.