- The expenditures of the personal nature must be included and thus, the fees of children paid by the company along with the mobile related expenses needs to be included in the computation (gov.au. 2016).
- The wages, salaries and remunerations is to be excluded from the computation
- The GST calculation must be done as per the method of Gross rate multiplication method
- The entertainment expenses towards the employees are complex in nature and thus the same must be excluded from the computation
The above computation is reduced with 49% of FBT taxes from the sales.
The amount of taxability of ABC Private Limited is as below:
b) The revised amount of taxability of ABC Private Limited is as below:
c). The expenses paid in respect to the clients must be taxable without any deductions as the same is distinct from the expenses paid towards the employees.
2. The assessable income that forms the part of the rules and regulations of the taxes forms two categories of proceeds and the two main heads are the ordinary and statutory heads of income. The same are described as under:
Examples of Ordinary Proceeds:
- Income proceeds from the wages and salaries
- Income from the Shares and securities
- Income from Rents, dividends and interest (Zelenak 2012)
Examples of statutory proceeds:
- Insurance and bonus from company
- Capital gains
- Retirement and termination
In the given case, the individual Peta had acquired two years ago, a building that had the objective of the generation of revenues and proceeds from the tennis court attached to the building. She had taken steps for the maintenance, repair and renovation of the court for attracting more revenues and incomes. Hence, the same became a part of the ordinary proceeds and thus a part of the assessable income (Piketty and Ganser 2014).
The club offered Peta a nice and attractive offer that made him inclined towards the selling off of the property. He had thought of selling the property in parts but ended up selling off the whole property after the offer of the club. The income that is earned from the selling off of such property is a part of the statutory proceeds and it will be taxable after adjusting exemption of 50% on total sales.
Ato.gov.au. (2016). Fringe benefits tax (FBT) | Australian Taxation Office. [online] Available at: https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/ [Accessed 20 Sep 2016].
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Huang, C.C. and Marr, C., 2012. Raising Today’s Low Capital Gains Tax Rates Could Promote Economic Efficiency and Fairness, While Helping Reduce Deficits. Center on Budget and Policy Priorities, p.14.
Piketty, T., and Ganser, L. J. (2014). Capital in the twenty-first century.
Roine, J. and Waldenström, D., 2012. On the role of capital gains in Swedish income inequality. Review of Income and Wealth, 58(3), pp.569-587.
Shiftan, Y., Albert, G., and Keinan, T. (2012). The impact of company-car taxation policy on travel behavior. Transport Policy, 19(1), 139-146.
Toder, E., and Baneman, D. (2012). Distributional Effects of Individual Income Tax Expenditures: An Update. Urban-Brookings Tax Policy Center, Washington, DC.
Zelenak, L. (2012). Custom and the Rule of Law in the Administration of the Income Tax. Duke LJ, 62, 829.