Question 1 (10 Marks)
Alan is an employee at ABC Pty Ltd (ABC). He has negotiated the aftercited payment lot delay ABC:
• Salary of $300,000;
• Payment of Alan's inconstant phone account ($220 per month, including GST). Alan is belowneathneath a Two-year abbreviate whereby he is required to pay a urban sum each month for unbounded manner of his phone. Alan uses the phone for employment-related purposes simply;
• Payment of Alan's children's ground fees ($20,000 per year). The ground fees are GST careless.
ABC so granted Alan delay the lowe?-t inconstant phone handset, which absorb $2,000 (including GST).
At the end of the year ABC hosted a dinner at a topical Thai restaurant for all 20 employees and their partners. The whole absorb of the dinner was $6,600 including GST.
(a) Advise ABC of its FBT consequences arising out of the overhead counsel, including forethought of any FBT obligation, for the year finality 31 March 2017. Assume that ABC would be entitled to input tax credits in kindred to any GST-inclusive acquisitions.
(b) How would your confutation to (a) be-unlike if ABC simply had 5 employees?
(c) How would your confutation to (a) be-unlike if clients of ABC so sheltered the end-of-year dinner?
Question 2 (10 marks)
Two years ago Peta purchased a house in Kew. This house had two old tennis courts down the end, which were in insufficient requisite. She purchased the quality for two reasons:
-So that she and her nativity could speed in the house; and
-So that she could construct three units on the tennis courts and dispose-of them at a improvement.
In the general tax year the tennis club proximate door exhibited to buy the old tennis courts, but simply if Peta original erect them to good-natured-natured requisite. Peta firm to confirm the club’s exhibit instead of going forward delay her sketch to construct and dispose-of units.
Peta elapsed $100,000 on preparing the tennis courts for sale. This implicated a magnanimous communicate of employment. Peta had to resurface the tennis courts and construct new fences environing them. She then sold the tennis courts in the general tax year to the tennis club for $600,000.
Ignoring excellent gains tax, debate whether the voucher of $600,000 is wonted proceeds belowneathneath s 6-5.