Mr Dominic Supreme owns a pizza restaurant. However, for public health reasons he has now closed… 1 answer below »

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Mr Dominic Supreme owns a pizza restaurant. However, for public health reasons he has now closed the

restaurant side of the business and is currently operating on a takeaway basis only. He has several employees

working in the kitchen and delivering pizzas. He also owns various assets, including a rental property.

Enzo is Dominic’s head chef and he is provided with the use of a Toyota RAV4 motor car as well as his salary of

$100,000 per year. The car was purchased by Dominic on 1 April 2018 for $55,000. Dominic has not made the

election under section 10 of the Fringe Benefits Tax Assessment Act. Enzo travelled 10,000 km in the car during

the FBT year ended 31 March 2019 and, of this, 4,000 km were for business purposes. Enzo paid for the petrol

for the car and this amounted to $900 for the FBT year ended 31 March 2019. Enzo was not reimbursed for the

petrol.

Maria is Dominic’s store manager and she was given an interest free loan of $500,000 by Dominic on 1 January

2019. Maria used the loan for two purposes: 60% for the purchase of an investment property and 40% to pay

off her home mortgage.

Because of the current health crisis, Dominic pays the private health insurance premiums of all his staff and

these premiums were $55,000 for the year ended 31 March 2019.

Dominic purchased a rental property on 1 July 2018 for $1,200,000. To finance this purchase, he borrowed $1

million from Megabank at an interest rate of 5%. To arrange for the loan Dominic paid a total of $4,000 for a

loan application fee, a valuation fee and legal fees on 1 July 2018. He also paid stamp duty of $52,000 and

$3,200 in legal fees in connection with the purchase of the property.

Attachments:

taxation-assi….pdf

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