Geoware Pty Ltd is a small engineering advisory firm operating out of Sydney, which began operating in January of the current tax year. Jenny, the director of the firm, has sought your services for the following issues.

Jenny registered the business for GST when the business began operating; however, believes that he should not have because of a rumour he heard regarding the requisite threshold being $150,000. Geowares turnover (which are taxable supplies) so far is only $25,000 (excluding GST). The reason he is wanting to be registered is to ensure he can claim the input tax credits from the following outgoings purchased solely for the business (all items supplied to the business are taxable supplies):

• Furniture amounting to $3,300 (including GST).
• Computers and printing equipment amounting to $8,800 (including GST).
• Commercial rent of $22,000 (including GST).

Jenny is also concerned about the income tax and FBT compliance for his staff. In particular, Jenny employs one person, Que, who has been provided with the following items by the business:

• Wages of $80,000 per annum, paid directly to his partners account.
• Lump Sum Bonus of $5,000 where the business meets or exceeds turnover.
• Travel allowance of $60 per month to cover public transport costs to project sites.
• Mobile phone, valued at $1,300, for use whilst on site.
• Monthly phone bills are paid by the business.

The business also provides staff with tea and coffee facilities each day and plans to provide an annual Christmas or birthday gift up to $150 in value each.

Required: Advise Jenny of the tax consequences of the above employment provisions by answering the following question set. Ensure you make reference to appropriate sources of tax law. No calculations are required.

Explain the FBT consequences for Ques employment benefits outlined above.

Explain the FBT consequences for the additional items provided by the business to its staff.