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Fringe Benefit Tax
 


Exercise 1
 

Brick & Tile Ltd is a building outfit. Their IRD number is 35-901-222. The company files FBT returns on a quarterly basis and elects to pay fringe benefit tax at a single rate of 49.25% on all benefits.
 
Brick & Tile Ltd had the following transactions during the quarter ended 31 December 2012. There are 92 days in the December quarter.
 
Note: All of the following amounts are inclusive of GST where appropriate.
 

Motor vehicles

 
During the quarter ending 31 December 2012 Brick & Tile Ltd had the following motor vehicles 

Vehicle details                                                                        Cost (incl GST)

2008 Ford Falcon (Registration number TX 529)                  $55,500

2009 Mitsubishi Fuso (Registration number MN6953)          $69,200

 

The Ford Falcon was available for Jane Gudsell’s (an employee) private use and enjoyment at

all times. During the quarter the vehicle was in the workshop for 5 days. It was used to make one emergency call on the weekend and another one on a public holiday. It was taken away on a selling trip for 8 days.

The Mitsubishi Fuso is a light-weight truck weighing 4.8 tonnes. James, an employee of Brick & Tile Ltd, takes the truck home with him every night for convenience.
 

Loans

 
During the quarter ending 31 December 2012 Brick & Tile Ltd had the following loan with an employee, Bob Jones. The loan was originally granted in 2010.

As at 1 October 2012 Bob’s loan balance was $25,000. During the quarter Bob did not make any repayments. Interest is currently being charged at 4% per annum.

 

Provision of Goods and services

 

During the quarter ending 31 December 2012, Brick & Tile Ltd provided the following goods and services to the named employees.
 

Graham Smith Brick & Tile Ltd provided discounted building materials to Graham for $400, which cost the employer $550 to produce and is usually sold to the public for $750.
Tanya Gray Brick & Tile Ltd provided discounted building materials to Tanya for $300, which cost the employer $250 to purchase and is usually sold to the public for $350.
Louis Patterson Brick & Tile Ltd put in a fish pond at Louis’ private premises for free. The normal cost to the public is $800.
Dave Taylor Brick & Tile Ltd provided Dave with the all of the necessary material to build a fence for his property for $275. The materials cost the employer $325.

 

Note: no other goods and services have been provided in the preceding two FBT quarters.
 

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Entertainment

 

A new employee (Gavin Lovett) arrived from South Africa during the year and is currently renting a flat for $400 per week. Brick & Tile Ltd gives Gavin some restaurant vouchers as a welcome incentive. The value of the vouchers is $3,300.
 

Training Course

 

One of the sales representatives of Brick & Tile Ltd, Gregory Smith undertook a personal development course with “Skills R Us” which the company paid for (cost was $1,560). Brick & Tile Ltd encouraged him to go on the course as part of his professional development, and it did significantly improve his interaction with customers.
 

Accommodation

 

Each Brick & Tile Ltd’s three sales representatives spend around $300 per week for accommodation and meals, when they are away from home each FBT quarter. They use a company credit card to charge these expenses directly to the company.

 

 

Business Tools

 

Brick & Tile Ltd provided three of its sales representatives with laptops (to the value of $3,250 each).
 

Required

 

  1. Prepare Brick & Tile Ltd’s FBT taxable value calculation sheet (IR 427) and FBT return (IR 420) for the quarter ended 31 December 2012, using the forms provided. Show all workings on the form provided.

Exercise 2
 
Calculate the FBT value for each of the following

  1. Susan received $90,000 loan from her employer ABC Ltd on 20 November 2008. Interest is charged at 5% per annum. Sarah has not made any repayment since. There are 90 days in the quarter ended 31 March 2013.

 

     

  1. TNT Ltd is preparing their FBT return for the quarter ended 31 December 2012. TNT provides the following benefits to the named employees;

    2.  

  • Ted Smith $500 Gift voucher
  • Greg Spears Discounted clothing for $80 (cost to employer $250)
  • Katie Voigt Discounted clothing for $50 (cost to employer $70)
  • Hayley Peterson TNT Ltd installed Hayley’s kitchen for free (normal cost

to the public $2,300)

 

     

  1. Malcolm has the full use of a Mazda for which his employer has entered into a lease. At the time of entering the lease agreement the market value of the motor vehicle is $28,000. During the September quarter he had a three-day work trip away. There are 92 days in the September quarter.

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