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Who pays Fringe Benefits Tax (FBT)

Discussion in 'Accounting, Tax & Legal' started by chris_qld, 8th Jun, 2019.

  1. chris_qld

    chris_qld Well-Known Member

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    brisbane
    I know a couple involved in MLM business, selling weight loss products (yes, holy sh;t), which are imported from the USA (where most of the MLM scams come from). The "benefits" ( "reward") they receive include payment for their leased BMW car. The car is under their name but the car has personalised number plate which is the product name of the MLM business). Both of them have formal full time office jobs as well. The lady drives the MLM car to work (so the car is not solely for MLM business).

    Obviously there is an issue with FBT. In Australia, FBT is a tax payable by employers for benefits paid to an employee (or an employee's associate e.g. a family member) in place of salary or wages. And obviously the American company which is located in the USA is not going to pay ATO the FBT. So, should the couples declare the "benefit" as a part of their income?
    The MLM business doesn't collect GST.
    Also are there any financial advantage for them to rent out their own property and move to a rental property?
     
    Last edited: 8th Jun, 2019
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  2. twisted strategies

    twisted strategies Well-Known Member

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    the ATO would most likely disagree , but the personalized plate , could be classed as ( opportunistic ) advertising ... could be an interesting legal fight eventually .

    would such a property move push them up the priority list on the ATO list of people to look at ??
    ( they might narrowly miss the thresholds to raise a red flag )
     
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  3. chris_qld

    chris_qld Well-Known Member

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    The rental property they just moved in is a five bedrooms modern mansion on an 1000m2 block. The rent is $850/week.
     
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  4. twisted strategies

    twisted strategies Well-Known Member

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    but the ATO is particularly hungry and motivated , so too big to be an easy-beat or too small to be noticed look to be preferable profiles .

    remember the ATO declares you guilty and lets you to try to struggle out of the fight
     
  5. Terryw

    Terryw Well-Known Member

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    Potentiall yes. They could get all the usual benefits of negative gearing and retain the CGT exemption for up to 6 years, plus they could potentially claim part of the rent of their rental if they are using one room for the business.

    But if the property would be positively geared, it could mean they end up paying more tax.
     
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