Determine FBT using operating cost and statutory cost

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Question - Tom provided his employee with a car on 1 April 2019 which was purchased on 1 October 2015 for $64,000.

The car was provided to the employee for the whole year. The operating cost of the car were:

Repairs - $5,000

Road tax - $6,100

Depreciation - $900

Insurance on car - $200

The employee contributed $150 per month. The car traveled 44,000km out of which 15,000km was for business.

(a) Determine FBT using operating cost and statutory cost method and advise which method is preferred.

(b) Discuss why employee contribution has to be deducted from taxable value.

Reference no: EM132562835

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