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Case study 1: FBT
John is a senior executive with a printing company. As part of his remuneration package, his employer pays for his child's school fees at a private school costing $15,000. His employer also provides him with accommodation in a Sydney apartment throughout the FBT year. John must pay $100 of rent per week for the apartment. The market value rent for the apartment is $800 per week.
Advise John's employer of the FBT consequences of John's remuneration package.
(1000 words)
Case study 2: GST
Wonder Sports is a large sports goods retailer. It purchases ‘sweet spot' tennis racquets for $110 each from Aussie Tennis Goods, a large manufacturer of tennis products. Wonder Sports plans to sell the tennis racquets at a 200% mark-up to its customers. In January last year it purchased 100 racquets.
However, in April, it discovered that 10 of these racquets had design faults and it returned them to the manufacturer and obtained a full refund.
Explain the GST consequences of this arrangement for both parties. (10 marks, max. 1000 words).
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