5.2 FringeBenefitTax%28ppt%292.ppt

5.2 FringeBenefitTax%28ppt%292.ppt - ACIS 254: Lecture 14 &...

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ACIS 254: FRINGE BENEFIT TAX CAPITAL GAINS TAX Andrew Maples Senior lecturer in Business Law and Taxation Department of Accounting University of Canterbury Christchurch
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2 FRINGE BENEFIT TAX BACKGROUND What is a Fringe Benefit? A fringe benefit is a non-cash benefit received by an employee or a shareholder-employee as a consequence of their employment. Note : (i) extremely broad application (ii) includes benefits received under an arrangement If provide FB must pay FBT in accordance “FBT” rules: s BE 1(4).
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3 FBT Background con’d Why was FBT Introduced? (a) (b) Overcame restrictions in taxing benefits and improved equity in the tax system (c) Encourage switch to cash remuneration Part of a review of personal income tax.
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4 FBT Background Employer not employee is assessed (vs employment income) FBT is normally paid quarterly Accommodation benefits are employment income not FBT: s CX 28. Cost of providing fringe benefit and FBT itself are deductible: s DA 1.
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5 EMPLOYMENT RELATIONSHIP Benefit must be provided in connection with the employment of an “employee” and be provided directly or indirectly by the “employer” of the employee Note : (i) ‘arrangements’ caught (ii) “employee” includes past & future employees (iii) benefits to associated person of employee e.g. spouse, subject to FBT
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6 CATEGORIES OF FRINGE BENEFITS Private use/available for private use of a motor vehicle Employment related low interest loans Subsidised transport Payment of specified insurance premium or contribution to insurance fund of a friendly society Non-monetary contributions to super schemes Any “unclassified” benefit e.g. discounted or free goods and services
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7 FBT RATE Prior to 1 April 2000 FBT of 49% From 1 April 2000 MAJOR CHANGES Initially FBT rate increased to 64% (inequitable for low income employees) Multi-rate FBT option provided Now: Employer either pay FBT at 64% (Single Rate Option ), or Adopt the new Alternate (Multi) Rate Option in full (or adopt multi-rate modification)
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8 Alternate (Multi) Rate Option (FBT Rate con’d) Procedure required to be followed by employer Attributed benefits : Certain benefits must be attributed: Motor vehicles (note exclusion), Low interest loans, Certain benefits with a taxable value $1000 or more
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This note was uploaded on 12/23/2009 for the course BCOM ACIS 254 taught by Professor Alistairhodson during the Spring '09 term at Canterbury.

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5.2 FringeBenefitTax%28ppt%292.ppt - ACIS 254: Lecture 14 &...

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