Furniture Kings Ltd manufacture various furniture items and to reward employees they allow employees to purchase up to three furniture items per year at 50% of the selling price. Calculate the company's FBT liability if Ann purchases 3 items @ $500 each during the FBT year ended 31 March 2020?

Question

Quizplus · Accepted Answer

The FBT (Fringe Benefits Tax) liability is calculated on the benefit provided to the employee, which in this case is the discount on the furniture. Ann purchases 3 items at $500 each, totaling $1,500. Since she gets a 50% discount, the actual benefit is $750 ($1,500 * 50%). The FBT rate for the year ended 31 March 2020 is 47%. Therefore, the FBT liability is $750 * 47% = $352.50. However, this calculation does not directly lead to any of the provided options, suggesting a misunderstanding in the calculation process or a mistake in the initial explanation. Given the options and the typical approach to calculating FBT, none directly align with the standard calculation provided, indicating a need for clarification or correction in the approach or the options provided.

Furniture Kings Ltd Manufacture Various Furniture Items and to Reward