Tom Smith and Jerry Brown are solicitors in a partnership called Smith & Brown Lawyers. The partnership purchased a new vehicle for their employee Larson Hewson, (a solicitor) to use for both work and private purposes on 1November 2019.The car cost $55,000 and they paid an extra $660 to have a tow bar installed before the vehicle was delivered. The car was provided to Larson for his use (both work and private) from that date. Larson was required to keep a logbook. This showed that 11,000 km were travelled for a twelve-week period during 1 January - 31March 2020, and of these, 5,000 km were for business purposes.

Unfortunately, in early February, Larson was involved in a traffic accident, which caused a substantial amount of damage to the vehicle. The repairs cost $3,750 (which was covered by insurance) and the car was off the road for 18 days while the repairs were being done.

Other expenses incurred by Smith & Brown Lawyers relating to the vehicle were:

• Registration & insurance $1,330 (for 12 months), which was paid on 1November2019
• Fuel: $5,000

Larson paid out $800 for petrol and oil to the local service station in respect of the vehicle and is able to substantiate these payments. Larson also contributed to the car insurance by paying $300 directly to the Partnership.

Note that Smith & Brown Lawyers is registered for GST and that where relevant the costs mentioned above include GST.

Smith & Brown Lawyers has elected to use the operating cost basis under section 10 FBTAA for the vehicle.

Smith & Brown Lawyers also pays Telstra directly for Larsons' mobile phone expenses from 1^st November to 31 March which equates to $2,180 (inc GST) - as he uses his own mobile phone for work purposes. Larson estimates that 35% of his mobile phone use is for work purposes.

Smith & Brown Lawyers paid all Law Society Membership fees of $920 (inclusive of GST) for Tom, Jerry and Larson

Required:

(1)Work out whether Smith & Brown Lawyers has an FBT liability in respect of providing the vehicle to Larson and for paying Larson's Telstra mobile phone bill and his Law Society Membership fees. Work out whether the FBT liability will also include the partners Law Society membership fees.If they do, calculate how much that liability would be for the 2020 FBT year.

(2)Work out if Larson would have a reportable fringe benefit in respect of the vehicle provided to him and the mobile phone payment by Smith & Brown Lawyers