Reference no: EM133556150
Drew is an Australian resident taxpayer who is a qualified electrical engineer. He is employed by a large Australian public company Electric Air Ltd ("ElectricAir"). Drew is paid a salary of $110,000 per year. ElectricAir also pays 10% compulsory superannuation contribution imposed on employers, into the superannuation fund chosen by Drew.
ElectricAir pays Drew's annual membership fee to the Institute of Electrical Engineers, at a cost of $700 per annum. They also pay Drew's private health insurance at a cost of $5,250 per annum. All of these costs are paid by ElectricAir on 1 July 2021.
On 1 September 2021, Electric Air provided Drew with an all-expenses paid yoga retreat as part of a health and wellness initiative the company has started. The cost of the retreat was $3,500 per annum. The yoga retreat is non transferrable and is not convertible into money.
Drew incurred the following expenses in the year ended 30 June 2022:
Donation to the Australian Red Cross (a deductible gift recipient): $500
Taxi fares to attend client meetings: $400. These costs were reimbursed by his employer.
Mobile phone bills: $900. Drew estimates that 20% of his mobile phone usage is work related.
Childcare expenses for his daughter (2 years old): $4,000
Drew and his wife Shelly jointly own an investment (rental) property. For the year ended 30 June 2022, the partnership received rental income of $22,000 and had deductible expenses related to this rental property (including interest) of $19,000. For the previous year (year ended 30 June 2021), the partnership had a net loss of $2,000. The partnership agreement specifies that profits and losses will be distributed 85% to Shelly and 15% to Drew
1. Calculate Drew's taxable income for the year ended 30 June 2022. You should explain the reason for including or excluding the amounts referred to in the facts in the calculation of taxable income.
2. Calculate ElectricAir's fringe benefits tax (FBT) liability for the FBT year ended 31 March 2022 showing the basis of your calculation.