Periwinle Pty Limited Case
Periwinkle Pty Limited Case Study
A Fringe Benefit is a form of pay that employees pay employees by providing the employee to enjoy certain privileges. Providing a company car for the employee to use is a commonly used fringe benefit that is made available for management and field work workers. Also, the company can decide to offer cheaper prices for its employees by availing the services and products to the employees. This allows the employee to access the products of the company at a price that is slightly lower than the market place. Another fringe benefit may be realized when a company offers a cheaper loan to its employees; in most cases, the interest rates are usually less than bank interest rates. These benefits are usually designed …show more content…
Instead of buying the product at $2,600, she was sold the bathtub for only $1300, a product with a manufacturing cost of $700. This benefit is usually provided to employees where the service or the product offered by the company can be accessed by the employees at a cheaper price. To make reasonable offer, the company should consider the gross profit on the product or service before deciding the price for employees. The company is supposed to record the gross up taxable value of certain fringe benefits provide to the employee on their annual payment summaries if the taxable value of those fringe benefits exceeds $2,000. In this case, the gross up rate is supposed to be 1.8692 without considering the type of benefits (Wilmot, …show more content…
In this case, the $50,000 that Emma could have invested in buying Telstra shares would have not been taxed. Instead of charging the whole amount, the tax will be calculated on $450,000 only. Also, an amount similar to the interest charged will be subtracted to remain with only $429,975. This figure will be arrived at after first subtracting $50,000 meant for investment and $20,025 exempted due to the interest charged on Emma.
Fringe Benefit Tax Act 1986 meant for the commonwealth countries is usually used to calculate the employer’s liabilities that are associated with the fringe benefits (Wilmot, 2012). To determine the employer’s liability, the taxable value of the benefits should be grossed up by 2.0647 since the company is enjoys input tax credit. Finally, the tax will be calculated using a rate of 46.5% to determine what the company will have to pay as tax on the fringe
A Fringe Benefit is a form of pay that employees pay employees by providing the employee to enjoy certain privileges. Providing a company car for the employee to use is a commonly used fringe benefit that is made available for management and field work workers. Also, the company can decide to offer cheaper prices for its employees by availing the services and products to the employees. This allows the employee to access the products of the company at a price that is slightly lower than the market place. Another fringe benefit may be realized when a company offers a cheaper loan to its employees; in most cases, the interest rates are usually less than bank interest rates. These benefits are usually designed …show more content…
Instead of buying the product at $2,600, she was sold the bathtub for only $1300, a product with a manufacturing cost of $700. This benefit is usually provided to employees where the service or the product offered by the company can be accessed by the employees at a cheaper price. To make reasonable offer, the company should consider the gross profit on the product or service before deciding the price for employees. The company is supposed to record the gross up taxable value of certain fringe benefits provide to the employee on their annual payment summaries if the taxable value of those fringe benefits exceeds $2,000. In this case, the gross up rate is supposed to be 1.8692 without considering the type of benefits (Wilmot, …show more content…
In this case, the $50,000 that Emma could have invested in buying Telstra shares would have not been taxed. Instead of charging the whole amount, the tax will be calculated on $450,000 only. Also, an amount similar to the interest charged will be subtracted to remain with only $429,975. This figure will be arrived at after first subtracting $50,000 meant for investment and $20,025 exempted due to the interest charged on Emma.
Fringe Benefit Tax Act 1986 meant for the commonwealth countries is usually used to calculate the employer’s liabilities that are associated with the fringe benefits (Wilmot, 2012). To determine the employer’s liability, the taxable value of the benefits should be grossed up by 2.0647 since the company is enjoys input tax credit. Finally, the tax will be calculated using a rate of 46.5% to determine what the company will have to pay as tax on the fringe