Q1

A car purchased on 1 April 2013 for $38,000 is used by an employee which was garaged at the employees residential premises for the whole year.

The employee travelled 26,500km during the year and had contributed $2600 to the employer.

Assume the employer can claim GST input tax. The private kilometers travelled were 5300km for the year.

a)Determine the period when the value will change and the reduction in base value? [2 marks]

b)Determine the taxable value using statutory cost method and the FBT liability for the period ended 31 March 2021. [5 marks]

c)Assume the following costs were available for the car.

Annual Registration and insurance - $1,250

Repairs - $500

Maintenance - $1,780

Fuel - $4,500

Deemed depreciation: ?

Deemed interest: ?

Determine the taxable value and FBT liability for the year ended 31 March 2021 using operating cost method. Between part (b) and (c), which will you choose and why?