An employer provides three (3) employees with various fringe benefits. The employer wants your assistance calculating his final fringe benefit liabilities to ATO. The following benefits have been provided during the current FBT year:

• Employee 1 received a car (GST inclusive) for personal and business use. The car is parked at the employee's home garage every night. The total operating cost for the car was calculated using a logbook, was $18,000. 45% of the total distance was travelled for personal reasons. The employee used the car for the full time of the year, and no personal contribution was made towards the operating cost of the car.
• Employee 2 received a washing machine from the employer. The business sells this item to the public as per regular business activity. The selling price to the public for this item is $4000 (GST inclusive). The employee paid $700.
• Employee 3 received a loan of $12000 and later got to know that the employer waived $8000 of the total amount (GST exclusive)

a) Analyse and explain the above situation for the benefits provided by the employer.

In your analysis, for each benefit, you are required to show the step-by-step FBT calculations and advise the employer on its final FBT liability. 

 

b)    How much does employee 3 needs to add to his tax return for the benefit received? Give a brief explanation of the legal requirement.