Reference no: EM132567345

Question - Jane Flemming is the marketing manager of Peak Finance Pty Ltd, a Sydney-based mortgage broking firm. She has been provided with a company car. The car originally cost the company $63,400 (GST inclusive) when it was provided to her on 1 March 2016. Jane did not contribute to the running costs.

As the firm had insufficient space on its premises to park the car outside office hours, Jane is allowed to garage it at her home each night from the date of acquisition. During the FBT year ended 31 March 2020, the car was at the smash repairers for 12 days whilst the damage from an accident was being repaired.

The company uses the statutory method for FBT purposes.

During the FBT year ended 31 March 2020, Jane also received the following benefits as part of her salary package:

1) Entertainment allowance $3,000 (GST Inclusive) p.a.

2) Jane is required to travel to various locations to visit prospective clients. Her employer requires Jane to be contactable at all times and has provided her with a mobile phone for this purpose and pays all its related costs, including calls (on which GST has been paid). Jane estimates that 80 per cent of the calls she makes are for private purposes.

3) A low interest loan of $100,000 provided to Jane on 1 July 2019. The interest rate on the loan was 2.5%. Jane used the money to finance extensive renovations to her principal place of residence.

4) Other benefits from her salary package entitle Jane to the benefit of subscriptions to professional magazines ($350 pa), professional association membership subscription ($210), and the use of airport lounge membership ($460).

5) In February 2020, Jane attended a two-day marketing conference at the Splinters Guest Resort in the Hunter Valley. She spent $750 on travel, accommodation and conference registration. Peak Finance Pty Ltd reimbursed her for the expenditure.

Note: Peak Finance Pty Ltd is registered for GST

PREPARE A REPORT advising Peak Pty Ltd on the tax treatment of Jane's remuneration package for the year ended 31 March 2020. In your report, you should address the following:

a) Explain what components of the remuneration package provided by Peak Finance Pty Ltd constitute a fringe benefit, and if so what type of fringe benefit. You must also explain why a component is or is not a fringe benefit.

b) In your report, you should explain the conditions that give rise to the fringe benefits that you have identified in (a) above.

c) Where relevant, calculate the fringe benefits tax payable in respect of the particular remuneration component for the FBT year ended 31 March 2020.