Mary Jackson Compensation Case Study

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Mary Jackson is a marketing consultant at Elite retail and has recently relocated to Brisbane. She was concerned about the tax implications of various benefits received by her in the course of her employment.
Relocation:
Mary Jackson has been paid $4,000 by her employer for the transfer of furniture. Under section 61B, Division 14 of Fringe Benefit Tax Assessment Act 1986, the benefit is an exempt benefit for Mary Jackson because any payment made to an employee for packing, unpacking, removal and fixing for relocation of employees is an exempt benefit provided the relocation is necessary for course of her employment. Further, payment made by her employer in respect of this relocation is an allowable expense for Elite Retail. (Core Tax Legislation & Study Guide, 15 Edition, 2012).
Salary:
The salary of $120,000 is taxable income under section 4-15 of Income Tax Assessment Act1997, after deducting any annual income tax allowance on taxable income. The salary is a tax deductible expense for Elite Retails during calculating its annual profit. (Core Tax Legislation & Study Guide, 15 Edition, 2012).
Entertainment Expenditure: Under sub-section 37AD, Division 9A of Fringe Benefit Tax Assessment Act 1986, …show more content…
Under section 16, Division 4 of Fringe Benefit Tax Assessment Act 1986, if employer grants loan to employee at a rate lower than benchmark rate then the difference amount will be susceptible for fringe benefits. The benchmark rate in Australia is 5.95%, so the excess of 1.95% will be considered as a fringe benefit for Mary. The taxable fringe benefit will be gross-up by 1.9608 because we consider it as a Type 2 benefit and will result a taxable benefit of $19,117.8 ($500,000 X 1.9608 X 1.95%) and when this taxable benefit is charged at a tax rate of 49%, then it result FBT liability of $9,367.7 ($19,117.8 X 49%). (Core Tax Legislation & Study Guide, 15 Edition,
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