As per “taxation rulings of MT 2027” the private use has been determined as per “sub-section 136 (1)” this shows any kind of use made by the associated or the employees used in generating the assessable income of the employee which will be used for private use. The operating cost method has been further seen to be evaluated as per “sub-section 136 (1)”, which defines the valuation method for the effect of private use of the car.
Under the para 3 of the “Miscellaneous Taxation Ruling” concerning the business journey for recording the logbook and ideal document in case the car is used in the determination of the private use. The determination of fringe benefit for the car used by Charlie, the operational cost valuation shall be applied which is seen to follow “sub-section 136 (1) of the Miscellaneous Taxation Rulings of 2027” (Australian Government 2015).
The determination of the private use and business use of the car has been seen to be used for FBT purpose which has been further defined with the income tax law in ascertaining of expenditure in accordance with “section 51 of the Income Tax Assessment Act 1997”. The difference in the private and business use of the FBT has raised several questions on whether Charlie had incurred expenditure on the use of the car and the expenditure in the present case.
Based on the several depictions of the case study FBT facets are taxable in nature under FBT Act 1986. The use of car by Charlie has been seen to constitute use of car for business use and should be used in producing the assessable income of the employees, henceforth it attracts FBT (Doran et al. 2013).
It needs to noted that Allan sells the excess produce of farming to the local farming and regularly supplies to three retailers. As per the Australian Taxation rulings, even the activities are considered as hobby but supplies services or goods to business (retailers), they may request for ABN. As there is not mention of having ABN, Allan and Betty should maintain “Statement by a supplier” form. This will allow the retailers to pay any tax amount which they are withholding from paying (SMAILES and MCDERMOTT 2013).
In a hobby there need not be any existence of retailers. In this case sold the excess produce to the local supermarket regularly supplying to the three sweet potatoes and pumpkin.
In the second case the setting up of barter system would need to pay an up-front, one-off fee of $50 to Allan and Betty and the same is kept for administrative records. This clearly calls for the business to be held for tax assessment.
As per Australian taxation guidelines it needs to be noted that barter transaction is assessable and deductible for income tax to the same extent as credit transactions or cash. The payment for the tax in this case needs to be in either cash or kind in this case (Whait 2014).
Australian Government (2015) ‘Australian Taxation Office’, Registerting for GST. Available at: https://www.ato.gov.au/Business/GST/Registering-for-GST/.
Doran, C. M., Byrnes, J. M., Cobiac, L. J., Vandenberg, B. and Vos, T. (2013) ‘Estimated impacts of alternative Australian alcohol taxation structures on consumption, public health and government revenues’, Medical Journal of Australia, 199(9), pp. 619–622. doi: 10.5694/mja13.10605.
SMAILES, A. and MCDERMOTT, P. M. (2013) ‘The Uniformity Of Taxation Penalties In Australia.’, Monash University Law Review, 39(1), pp. 213–245. Available at: https://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=90278272&lang=es&site=ehost-live.
Whait, R. B. (2014) ‘Exploring innovations in tax administration: A Foucauldian perspective on the history of the Australian Taxation Office’s compliance model’, eJournal of Tax Research, 12(1), pp. 130–161.