Mr. Prakash Ram is a university professor and works with Fiji National University based in Nasinu campus. Mr. Prakash has an ancestral house where he resides with wife, one son and his brother in Samabula. In 2009, he and his wife decided to construct another house in Tamavua. He bought a free hold land for $80 000. He constructed a two flat house which has a construction cost of $285 000. He has to pay a legal fee of $4 500. In 2017 he decided to sell the newly constructed house for an amount of $890 000. He paid another $35000 for the renovation.

 

Required: 

Calculate Mr. Prakash Net Capital Gain and calculate his Capital Gain Tax payable on the sale of the house. Capital Gain Tax is 10%. 

 

 

Question 2: Fringe Benefit Tax

 

Dr. Johnson is a consultant with Ministry of Economy and a professor of Economics. He is with Ministry of Economy, working on minimum wages rate. He is on a contract for three years started in 2016. He receives salary of $125000 and motor vehicle allowance of $18000 per year. He has a kid who studies in class11 in Suva International School. Ministry pays his fee which is $11250 per year. He is also entitled to some other non-cash benefits listed as below:

• Household personal fringe benefits $18 000 annual
• Ministry has provided a furnished house @ $1750 per month
• Ministry will also provide $12 000 housing allowance if he is in any remote area of the country
• He is entitled for $180 week meal allowance. This meal is provided by ministry's cafeteria.
• He has a Toyota Hilux provided by the Ministry. Engine capacity is 2000 CC. Tax details are below:

Engine Capacity	Value for each Quarter (VEP Amount)
Under 1,800cc	$656
1,800cc and <2,000cc	$778
2,000cc and above	$958

 

• He is entitled for personal expenditure fringe benefits. He gets $500 per month for personal expenditure
• He also receives residual fringe benefits of $18 000 annual.

 

Required:

 

Calculate the value of net fringe benefit, gross fringe benefit and FBT payable.

 

 

Question 3: Trust

Mr. Veer Sami has some commercial properties in the heart of Suva which have a total worth of $9 870 000. His wife was died long back and he had two sons and 1 daughter. As per his will, upon his death, all the property will be under a trust named as Sami &Family Trust, managed by his elder son Shiv Sami. He will have a share of 40% in while other two Vishnu and Arti will be having equal shares. During the financial year 2017, the followings are financial transactions:

• Commercial properties are rented out which generated $185 000 rent during the year
• From the business they earned $327 000
• They have investment in BSP worth $70 000 and return is 3.5% annual
• For the rented property, costs incurred were: 

1. Insurance $3750
2. Depreciation $21500
3. Local council rates $5000
4. Leasing costs $12500
5. Security of the premises $13500

 

Required:

Calculated Income Tax for each beneficiary Shiv, Vishnu and Arti for the financial year ended on 31s^t December 2076.