Reference no: EM13496309

Question 1

Paul is a Sales Manager of Chatswood Pty Ltd with a weekly salary of $1,000. He is mainly responsible for selling camera equipment in NSW. On 1 April 2011, Paul was provided with a fully maintained company car which was newly bought for $22,500 on the day. From 1 April 2011 to 31 March 2012, Paul travelled 20,000 km for private purposes and paid nothing at all during the year. He was also provided with an entertainment allowance of $2,000 per year. In addition, part of his executive package provided him with a loan of $8,000 for a year at a concessional rate of 3% per annum commencing 1 April 2011.

REQUIRED:

Advise Chatswood Pty Ltd as to its fringe benefits tax liability for the year ended 31 March 2012.

Question 2

On 1 January 2012, Peter borrowed $520,000 from a bank at a commercial interest rate of 8% per annum to purchase a "negatively geared" residential investment property in Australia. He is required to pay a weekly interest of $800. Immediately after acquiring the property, Peter engaged a real estate agent to advertise the property asking for a weekly rent of $400. Unfortunately, the real estate agent is unable to secure a tenant and the property is still vacant.

REQUIRED:

Discuss whether Peter would be entitled to any deductions in respect of the interest expenditure incurred from 1 January 2012 to 30 June 2012 for the 2011/2012 income year.