Reference no: EM13178841

Question 1

An employer provides taxable fringe benefits of $11,000 (GST inclusive) for hisemployees during the relevant period, all being for creditable purposes and input tax credits of $1,000 were claimed (i.e. type I benefits). No non-exempt or type 2 benefits were provided.

REQUIRED:

Explain and calculate FBT liability. What is the after - tax cost to the employer of providing the benefits?

Question 2

Smith purchases a rental property for the purpose of gaining income according to ordinary concepts. He enters into a contract on 20 September 1987 to purchase the property for $400,000 from Brown. On that day he pays a deposit of $40,000. The property is conveyed on 20 November 1987. Thesolicitor's fees are $9000 and stamp duty is $4000. On 20 June 2011 he enters into a contract to sell the property for $700,000. He receives a deposit of $70,000 on that date and the balance of the purchase price on 20 August 2011.

REQUIRED:

Advise Brown for the 2010/2011 income year - What is his capital gain and in what year is it assessed? Is there a CGT event?

Q.1.Fringe benefit

• What is fring benefit (2/3 Lines)
• What is type1 FBT and Type 2 FBT ?
• Show the calculation for type 1 benefit and esplain why you calculated in this way ? (Your judgement)
• Show calculation for Type 2
• Make assumption and explain what you did and what you learnt .
• Provide your judgement: Is it related to type 1 or type 2 ? Once you found out , decide what would be your FBT ? hints : 46.5% of FBT amount.

Q.2.CGT

• CGT Definition
• Identification of CGT event and explain
• Explaination of method of calculation
• Provide related case study
• Explain in no more than 5 sentences
• Provide explanation on how the case study is more related to provide as reference
• Provide calculation under index and discount method.
• Choose the right amount of CGT event
• Calculate the CGT tax payable amount
• Decide which amount of CGT Tax payable will be considered as a CGT tax liability for the tax payer.