This question is based on end of chapter question 7.4 of PoTL 2019.

All amounts in this question includes GST where applicable. Where applicable, Rocklands uses the primary cost method and the effective life of assets is 2 years. Rocklands doesnt keep a register of entertainment, and applies Div 9A where applicable.

Rocklands (Pty) Ltd (Rocklands) operates the largest network of car dealerships in Queensland, with branches in twenty towns and suburbs. Alan has been an employee of Rocklands for the past five years. He is the regional finance director. He has negotiated the following remuneration package with Rocklands:

Salary of $160,000.

Superannuation guarantee contributions, $15,200.

Payment of Alan's mobile phone bill of $110 per month. Alan has a two-year contract with the service provider that stipulates he is required to pay a fixed sum each month for unlimited usage of his phone. Alan uses the phone for work-related purposes only.

Payment of Alan's children's private school fees of $20,000 on 1 February 2019.

Payment of Alans annual membership of Chartered Accountants Australia New Zealand, due on 31 December 2018, $660.

Rocklands also provided Alan with the use of the latest mobile phone handset on 1 February 2019 that the company purchased on that day for $2,000. He uses this phone with the mobile phone contract referred to above. Prior to that date, Alan used a mobile handset that he won in a competition a few years back.

At the end of March 2019, Rocklands hosted their annual dinner party at a local Thai restaurant for all 20 their Brisbane based employees and their partners. The total cost of the dinner was $6,600.

Part a:

Briefly explain whether the payment of Alans phone bill is assessable as ordinary income from his perspective.

Part b:

Assuming that the payment of Alans phone bill is classified as a fringe benefit, calculate the fringe benefits tax payable by Rocklands for the FBT year ending 31 March 2019. Your answer must address each of Alans work entitlements separately. Show all your calculations, provide reasons for your answers, reference relevant sections of the Fringe Benefits Tax Assessment Act, provide explanations for reductions applied to taxable values, and clearly categorise each fringe benefit.

Part c:

Assuming that Rocklands profit before tax before taking into account any of the transactions above is $12,000,000, calculate Rocklands taxable income for the 201819 income year. Show all your calculations, provide reasons for your answers, referencing relevant sections of the Income Tax Assessment Acts.

Part d:

In reference to the dinner: Assuming that all the conditions in Question 2b are present, but that for purposes of this question, Rocklands does not elect to apply Div 9A of the FBTAA and that the annual dinner is held for five Brisbane based employees and their partners, how would your answer for fringe benefits tax and income tax change, if at all, in respect of the dinner when compared to Question 2b? Show all your calculations, provide reasons for your answers, referencing relevant sections of the Income Tax Assessment Acts. You are only required to deal with the dinner in this part of the question. Explain the FBT and income tax consequences.