T2, 2013 ASSIGNMENT 2 SOLUTIONS
Word count : 1000 words
Due date : 29 September
Reference style : Harvard style
Assignment 2: You should attempt both questions and both parts to this assignment. Each question carries a value of 5 marks. Total 20 marks
Note: you should incorporate all sections of the various Acts/regulations where appropriate.
Q1a; You have been approached by a Robin Hood, a client (law firm) who employs around 80 staff and as a result of a successful year, in recognising the efforts of staff is considering holding a luncheon (and will be for the entire afternoon on the Friday of September 20th 2013 (could be either on-site or off-site). He is also considering giving gifts to his employees as well. At this point, he is considering the following options;
a) Current employees only attend;
b) Current employees and their associates attend at a cost of $180 per head (to the firm)
c) Current employees, their associates and some clients attend at a cost of $365 per head.
You are to advise Robin of any FBT implications for the three considered options as well as the implications of income tax deductions.
Q1b: Errol provides his employee with the use of a car for 183 days during the FBT year ending 30th June 2013. During this time, the car travelled 16,000km. Errol purchased the car the previous year for $50,000. The employee contributed $1,000 towards the running costs of the vehicle and has provided Errol with relevant evidence.
Calculate the taxable value of the FBT for the car applying the statutory formula.
Q2a: Bridgette owns and runs a small licensed (alcohol) café. Her refrigerator broke down and she contacted an old client and friend of hers, Eddie (electrician) to repair it. Eddie’s normal charge-out rate is $100 per hour and it took 2 .75 hours to repair ($275) but instead, they agree that Eddie could have food and beverages to that amount instead of a cash payment. Both Bridgette and Eddie are registered for GST. What are the GST considerations for each party in regard to this arrangement (considering “supply”)?
Q2b: Bob the Builder is registered for GST and has recently completion the construction of a residence on a vacant block of land he purchased in Kingston. He employed a number of sub-contractors to build the house such as electricians, roof-tilers, plumbers, etc. all of whom included GST in their billings. Only a matter of weeks after the residence was completed, Bob sold the property to Thomas who in turns plans to rent out the property (tenancy). You are required to explain how GST (law) affects both Bob and Thomas.