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On 1 April 2017, QP Pty Ltd (QP) purchased a BMW XS car for $81,260. The car was for the exclusive use of Sam, the associate director. On the day of purchase, a rear parking camera was fitted to the car at a cost of $7,000. Between the date of purchase and 31 March 2018, Sam traveled 15,000 kilometers in the car, but he did not keep a logbook. QP paid all the expenses except the petrol, which amounted to $5,181 and was paid by Sam. This amount was not reimbursed, and Sam provided the required declaration to his employer. QP is entitled to claim the input tax credit for GST purposes.

Required: Advise on the FBT (Fringe Benefits Tax) to be paid by QP in relation to the car for the year ended 31 March 2018.

Answer :

Final answer:

The Fringe Benefits Tax (FBT) to be paid by QP Pty Ltd for the year ended 31st March 2018, based on the given details, will be around $17652. This is calculated using the statutory formula method considering the cost of the car, statutory percentage, days provided, and employee contribution.

Explanation:

The FBT (Fringe Benefits Tax) to be paid by QP can be calculated by using the statutory formula method. In this case, the taxable value of the car benefit can be calculated using the following formula:

Cost of car x Statutory percentage x (Days provided / 365) x (1 - Employee contribution / Cost of car)

Taking into account the given details: Cost of the car is $81260 + $7000 (rear parking camera) = $88260. The statutory percentage for 15000 km (without logbook) is 20%. The car has been provided for a full year, thus days provided is 365. As mentioned, Sam, the associate director, paid $5181 towards petrol, which is not reimbursed and is an employee contribution.

So, FBT = ($88260 x 20% x 365/365) x (1 - $5181 / $88260) = $17652

Note

:

This calculation is made based on the assumption that QP is not entitled to any GST credit for the FBT paid., which can be typically the case if the car is not used solely for business purposes. The exact specifics may vary based on Australia's tax laws and changes thereof.

Learn more about Fringe Benefits Tax (FBT) here:

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