Published on 01 Apr 00
by THE TAX INSTITUTE
Having reviewed the recently introduced A New Tax System (Fringe Benefits) Bill 2000, the Taxation Institute of Australia (TIA) has a number of concerns with the Bill and believes need some modification. The Bill seeks to clarify the interaction of the fringe benefits tax and goods and services tax (GST). These concerns are set out in the following: 1. New Gross Up formula; The Bill introduces a new gross up formula to be applied to "Type 1" fringe benefits. Type 1 fringe benefits are benefits given where the person who provided them has an entitlement to input tax credit. The formula is aimed at recouping any input tax credits arising from the provision of fringe benefits by an employer. The Explanatory Memoranda at paragraph 1.22 states that "the formula therefore ensures that the net cost to an employer of remunerating an employee with fringe benefits or cash salary will remain tax neutral after the GST is introduced".
TAX POLICY & RESEARCH DIVISION
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