Fnsacc401A Process Business Tax Requirements Assessment Answers

Question:

Answer:

Answer 1

Fringe benefit can be defined as a kind of payment made by an employer to his employee. It differs from salary paid to the employee. It is a kind of benefit that is provided to the employees because of their employment. The employees who are entitled to receive this benefit may be a past, present or future employee. An employee is a person who receives any wage or salary for the services provided by such employee because of his employment.

For example, reimbursement of telephone bills of the employee by the employer is a fringe benefit. Similarly, another example of fringe benefit is residential accommodation provided by the employer to his employee free of cost or at reduced charges.

Answer 2

A benefit can be deemed to be fringe benefit if certain conditions are fulfilled. Firstly, an employer must make the payment. Secondly, the payment must be made to an employee by reason of the employee’s employment. The employee could be a former, present or future employee. However, does not include any payment made to the legal heirs of a deceased employee. Lastly, the it is differs from salary in the sense that it is a ‘benefit’ that is provided to the employee because of his employment.

Answer 3

Tax is required to be paid on all incomes, which are earned during the year. However, the burden of tax payable can be reduced by claiming certain general deductions or by availing certain government rebates. The general deductions can be availed if such expenses are not reimbursed, the expense directly relates to the income that has been earned and adequate records have been maintained in order to substantiate the expenses that have been incurred. The following are examples of general deductions.

1. Expenses incurred on vehicle or travel related expenses incurred for commuting back and forth from the place of work.
2. Expenses incurred on purchasing or cleaning any work related clothing or uniform.
3. Expenses incurred on home expenses, which includes expenses on computer or other devices that are used of the purpose of work. Such expenses also include expenses on phones. Running expenses are also deductible.
4. Expenses incurred on earning any investment income like interest or dividend.
5. Expenses incurred on self-education if such study is work related.  

Answer 4

Table 1

Type 1 fringe benefits refer to those benefits in respect to which the provider of the benefit is eligible to claim input tax credit. Type 2 refers to those benefits in respect of which the benefit provider can claim tax credit under GST. Items purchased in and before the year, 1999 are not subject to GST. Hence, Toyota car is included in type 2. Medical expenses, loans and expenses on overseas travel are also GST free. Therefore, these items are included in Type 2.

Answer 5

The following records need to be maintained in order to be complaint with ATO. These records should be maintained for a period of 5 years from the end of the year to which these records pertain.

1. Taxable value of the fringe benefit provided.
2. The method that is to be applied for allocating fringe benefit that is provided to two or more employees.
3. The record should indicate that 100% of the taxable value has been allocated to the to the employees. The values of benefits that are excludible are not required to be to allocated amongst the employees.
4. In order to claim rebates and exemptions, relevant documents need to be maintained.
5. In case fringe benefits related to car, fleet management and log book records should be kept.

Answer 6

The employers pay payroll taxes. Its calculation is based on the amount of wages that are paid out by the employers. The following are five forms of payments that will be included in payroll tax calculations.

1. Bonuses, allowances and commissions paid to employees.
2. Contribution made to Superannuation Fund.
3. Payments made to workers who are employed on contract basis.
4. Salary sacrificed by the employee in order of get any non cash benefit in future.
5. Payments made on the termination of employment of an employee

Answer 7

Given below are the income tax rates for the year 2016-2017

Table 2

Entertainment expenses are not deductible. In addition, amount paid to mother is also not deductible. Charities approved by ATO are allowed as deduction. Amount received on birthday is not includable in the assessable amount. Income from lottery is also taxable. Further, tax preparation expenses are also deductible. Medicare levy is imposed at the rate of 2% on the taxable income. Train fares are also deductible. The tax payable has been computed in accordance with tax rates as mentioned above.

Answer 8

Goods and service tax (GST) is levied on goods and services. Any person selling goods or providing services needs to register with the goods and service tax authorities and follow the relevant provisions applicable to such person. The current rate of goods and service tax is 10%. A person who pays GST is eligible to claim input tax credit of the GST paid on the inputs used or services utilised by him in providing that service or producing that good. However, some goods and services have been kept outside the scope of GST. This means that GST is not payable on such goods and services. A person who is in business is required to use business activity statement (BAS) for the purposes of reporting and payment of GST. Also, BAS is used claiming input tax credit. BAS can be lodged electronically by the use of mail or by phone. BAS should be lodged for successful and smooth operation of the business. Due date for payment and lodging is displayed on BAS. If the due date falls on a public holiday, lodging and payment can be done on the following business day. Payment of GST should be made on regular basis. Annual GST Returns are required to be lodged at the end of every year providing the details regarding the sales and purchases made during the year, the GST paid on such sales and purchases and the input tax credit claimed during the year.

Randwick Dental Hospitals has to comply with all the requirements relating to payment and lodging returns of GST. Given below is the computation of GST payment of a quater.

Table 2

Pay G (Pay as you go) is a means by which the employer helps his employees and other payees to meet their yearend tax liabilities. A certain amount is withheld by the person making the payment. The Pay G withholder is required to register before appropriate authorities before withholding any amount. The Pay G withholder is required to report and pay the amount withheld on a timely basis. If an employer ceases to be an employer, the pay G registration needs to be cancelled. An annual Pay G withholding report needs to be lodged at the end of every financial year disclosing the amount withheld and the amount paid. The details of the payment made to the payees are also required to mentioned in the Pay G annual withholding report. Further, activity statements are also required to be lodged at regular intervals. The payment can be made using BPAY or credit card. Payment of withheld amount can also be done using internet banking.

Randwick Dental Hospitals has withheld $6900 from the amount paid as wages to its employees. It has to pay the said amount and comply with all the provisions as mentioned above.

References

'Australian Taxation Office | Australia.Gov.Au' (Australia.gov.au, 2017) <https://www.australia.gov.au/directories/australia/ato> accessed 7 June 2017

'Payroll Tax Australia' (Payrolltax.gov.au, 2017) <https://www.payrolltax.gov.au/> accessed 7 June 2017

Burton, Hughlene A., and Stewart Karlinsky. "Tax professionals' perception of large and mid-size business US tax law complexity." eJournal of Tax Research 14.1 (2016): 61.

Barkoczy, Stephen. "Core tax legislation and study guide." OUP Catalogue (2016).

Althaus, Catherine, Peter Bridgman, and Glyn Davis. The Australian policy handbook. Allen & Unwin, 2012.