Rapid-Heat Pty Ltd (Rapid-Heat) is an Electric Heaters manufacturer which sells Electric Heaters directly to the...

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Rapid-Heat Pty Ltd (Rapid-Heat) is an Electric Heatersmanufacturer which sells Electric Heaters directly to the public.On 1 May 2017, Rapid-Heat provided one of its employees; Jasmine,with a car as Jasmine does a lot of travelling for work purposes.However, Jasmine's usage of the car is not restricted to work only.Rapid-Heat purchased the car on that date for $33,000 (includingGST). For the period 1 May 2017 to 31 March 2018, Jasmine travelled10,000 km in the car and incurred expenses of $550 (including GST)on minor repairs that have been reimbursed by Rapid-Heat. The carwas not used for 10 days when Jasmine was interstate and the carwas parked at the airport and for another five days when the carwas scheduled for annual repairs. On 1 September 2017, Rapid-Heatprovided Jasmine with a loan of $500,000 at an interest rate of4.25%. Jasmine used $450,000 of the loan to purchase a holiday homeand lent the remaining $50,000 to her husband (interest free) topurchase shares in Telstra. Interest on a loan to purchase privateassets is not deductible while interest on a loan to purchaseincome-producing assets is deductible. During the year, Jasminepurchased an Electric Heaters manufactured by Rapid-Heat for$1,300. The Electric Heaters only cost Rapid-Heat $700 tomanufacture and is sold to the general public for $2,600.
Required: (a) Advise Rapid-Heat of its FBT consequences arisingout of the above information, including calculation of any FBTliability, for the year ending 31 March 2018. You may assume thatRapid-Heat would be entitled to input tax credits in relation toany GSTinclusive acquisitions. (b) How would your answer to (a)differ if Jasmine used the $50,000 to purchase the shares herself,instead of lending it to her husband?

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FBT Fringe Benefit tax needs to be paid by the Employer for fringe benefits provided or deemed to be provided to an employee in a fiscal year a The benefits in this case provided to Employee includes Car Car Fringe Benefits Loan at concessional rate of interest Loan Fringe Benefits Electric heaters at discounted price Residual Fringe benefits A car fringe benefit most commonly arises where the employer makes a car available for use to an employee for private use or the car is being treated to be available for private use FBT Calculations For See Answer

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Rapid-Heat Pty Ltd (Rapid-Heat) is an Electric Heatersmanufacturer which sells Electric Heaters directly to the public.On 1 May 2017, Rapid-Heat provided one of its employees; Jasmine,with a car as Jasmine does a lot of travelling for work purposes.However, Jasmine's usage of the car is not restricted to work only.Rapid-Heat purchased the car on that date for $33,000 (includingGST). For the period 1 May 2017 to 31 March 2018, Jasmine travelled10,000 km in the car and incurred expenses of $550 (including GST)on minor repairs that have been reimbursed by Rapid-Heat. The carwas not used for 10 days when Jasmine was interstate and the carwas parked at the airport and for another five days when the carwas scheduled for annual repairs. On 1 September 2017, Rapid-Heatprovided Jasmine with a loan of $500,000 at an interest rate of4.25%. Jasmine used $450,000 of the loan to purchase a holiday homeand lent the remaining $50,000 to her husband (interest free) topurchase shares in Telstra. Interest on a loan to purchase privateassets is not deductible while interest on a loan to purchaseincome-producing assets is deductible. During the year, Jasminepurchased an Electric Heaters manufactured by Rapid-Heat for$1,300. The Electric Heaters only cost Rapid-Heat $700 tomanufacture and is sold to the general public for $2,600.Required: (a) Advise Rapid-Heat of its FBT consequences arisingout of the above information, including calculation of any FBTliability, for the year ending 31 March 2018. You may assume thatRapid-Heat would be entitled to input tax credits in relation toany GSTinclusive acquisitions. (b) How would your answer to (a)differ if Jasmine used the $50,000 to purchase the shares herself,instead of lending it to her husband?