You are a tax agent and accountant and you need to advise Healthy snacks the best option from the following: Due to the growth of the business, in the coming year Healthy Snacks (an austrlain partnership, registered for GST) are looking at employing Fred, a customer service specialist, to visit their key clients and try to increase sales. They are considering different ways of remunerating Fred who would be using his own personal motor vehicle whilst performing his duties. The methods that they are considering are:
a) Paying him an allowance of $10,000 p.a. for the use of his own motor vehicle; or
b) Reimbursing 100% of the fuel costs for his vehicle up to a limit of $10,000 (i.e., Fred would need to provide for Healthy Snacks with his fuel receipts and would then be reimbursed the amount of the invoice). It has been estimated that the car would be used 30% for Healthy Snacks and 70% for personal use (Fred would also need to provide a declaration stating the business use percentage).
To date, Healthy Snacks provides no other fringe benefits to its current employees, so it is currently not registered for FBT and does not pay any FBT instalments.