Ash Hughes is the managing director of a mining company which has its head office in Perth and its main mine in the Kimberley. On 1 July of the current FBT year the company provided him with a leased car which would have cost $50,000 if purchased (inclusive of a delivery charge of $400 and an initial transfer tax of $600). The lease is for four years. Between 1 July and the following 31 March Ash Hughes expects to travel 23,000 km, of which 18,000 km will be for business purposes. He is entitled to use the car for private purposes at any time. Ash Hughes does not contribute to the running costs of the car. (a) Calculate the taxable value of the car using the statutory formula method. Would it make any difference if the company purchased the car rather than leased the car?
Ash Hughes is the managing director of a mining company which has its head office in Perth and its main mine in the Kimberley. On 1 July of the current FBT year the company provided him with a leased car which would have cost $50,000 if purchased (inclusive of a delivery charge of $400 and an initial transfer tax of $600). The lease is for four years. Between 1 July and the following 31 March Ash Hughes expects to travel 23,000 km, of which 18,000 km will be for business purposes. He is entitled to use the car for private purposes at any time. Ash Hughes does not contribute to the running costs of the car. (a) Calculate the taxable value of the car using the statutory formula method. Would it make any difference if the company purchased the car rather than leased the car?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ash Hughes is the managing director of a mining company which has its head office in Perth and its main mine in the Kimberley. On 1 July of the current FBT year the company provided him with a leased car which would have cost $50,000 if purchased (inclusive of a delivery charge of $400 and an initial transfer tax of $600). The lease is for four years. Between 1 July and the following 31 March Ash Hughes expects to travel 23,000 km, of which 18,000 km will be for business purposes. He is entitled to use the car for private purposes at any time. Ash Hughes does not contribute to the running costs of the car.
(a) Calculate the taxable value of the car using the statutory formula method. Would it make any difference if the company purchased the car rather than leased the car?
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