Ms Barbara Phillips, 61 years of age, is employed as an editorial assistant by a large publishing firm. In addition to her base salary of $60,000 (including mandatory superannuation guarantee [SG] contributions) she receives the following non-cash benefits from her employer:
• Fully maintained BMW motor vehicle purchased by her employer at the commencement of the financial year for $50,000. During the year the vehicle travelled 22,000 kilometres of which 9,000 were for business use. The total running costs of the vehicle over the last financial year was $12,000.
• Employer superannuation contributions of $20,000 paid to a self-managed superannuation fund (SMSF) established by Barbara.
The company adopts the statutory formula method for calculating motor vehicle fringe benefits with the relevant taxation office rate of 20% applying to the kilometres travelled during the year by Barbara.
a) What is the total value of Barbara’s total salary package with her employer?
b) What amount of reportable fringe benefits and reportable employer superannuation contributions (RESC) would be reported on Barbara’s payment summary?

Question

Ms Barbara Phillips, 61 years of age, is employed as an editorial assistant by a large publishing firm. In addition to her base salary of $60,000 (including mandatory superannuation guarantee [SG] contributions) she receives the following non-cash benefits from her employer:
•	Fully maintained BMW motor vehicle purchased by her employer at the commencement of the financial year for $50,000. During the year the vehicle travelled 22,000 kilometres of which 9,000 were for business use. The total running costs of the vehicle over the last financial year was $12,000.
•	Employer superannuation contributions of $20,000 paid to a self-managed superannuation fund (SMSF) established by Barbara.
The company adopts the statutory formula method for calculating motor vehicle fringe benefits with the relevant taxation office rate of 20% applying to the kilometres travelled during the year by Barbara.
a) 	What is the total value of Barbara’s total salary package with her employer?
b)	What amount of reportable fringe benefits and reportable employer superannuation contributions (RESC) would be reported on Barbara’s payment summary?

Quizplus · Accepted Answer

The Answer is a)

\begin{array} { l l r } ext { Details } & ext { Calculation } & ext { Amount (\$) } \ ext { Motor vehicle: } & \ ext { Employer cash outlay (1) } && \underline { 12,000 }\ ext { Taxable value of benefit } & \$ 50,000 imes 20 \% & 10,000 \ ext { Grossed up taxable value } & \$ 10,000 imes 2.0647 & 20,647 \ ext { FBT payable (2) } & \$ 20,647 imes 46.5 \% & 9,600 \ ext { Charge against package } ( 1 + 2 ) &\$ 12,000 + \$ 9,600 & 21,600\end{array}

\begin{array}{lr} ext { Superannuation: }\ ext { Employer cash outlay}&\underline{20,000}\ ext { FBT}&0\ ext { Charge against package (3)}&\underline{20,000}\ ext { Salary + SG contributions:}\ ext { Employer cash outlay}&\underline{60,000}\ ext { FBT}&0\ ext { Charge against package (4) } & \underline{60,000} \ ext { Motor vehicle: } & \ ext { Employer cash outlay } & \underline{12,000} \ ext { FBT } & 9,600 \ ext { Charge against package (5) } & \underline{21,600} \ ext { Total salary package }(3+4+5) & \underline{101,600}\end{array}

b)

\begin{array} { l l l } ext { Details } & ext { Calculation } & ext { Amount (\$) } \ ext { Motor vehicle: } & \ ext { Employer carh outlay } && 12,000 \ ext { Taxable value of beriefit } &\$ 50,000 imes 20 \% & 10,000\ ext { Grossed up taxable value }& \mathbf { \$ 10,000 imes 1.8692} & \mathbf { 1 8 , 6 9 2 }\end{array}

Hence the reportable fringe benefit included on Barbara's payment summary will be $18,692.
Reportable employer superannuation contributions (RESC) included on Barbara's payment summary would only be the additional $20,000 contributed by the employer for Barbara to her SMSF - it would not include the mandatory SG contributions.

Ms Barbara Phillips, 61 Years of Age, Is Employed as an Editorial