^ummmmmmmm....where to start???
You've grasped the wrong end of the stick........I didn't say you can simply choose which rent to pay......you can of course simply choose what rent to pay, but you need to be aware of the consequences of your actions.
In example 1 there is no fringe benefit to you as you are paying both more than the market rent and more than the actual expenses.....the company will make a profit and will be taxed on that profit.
In example 2 there is no fringe benefit to you as you are paying more than the market rent and meeting actual expenses....the company won't be making a profit though and no tax will be paid.
In example 3 there is no fringe benefit to you as you are paying the market rent but the expenses aren't being met ...the company will make a loss and tax credits will accrue.
In example 4 there is a fringe benefit to you as you are paying less than market rates...the company will make a loss and tax credits will accrue....FBT will need to be paid
This is wrong ...
It's wrong, but also you're grasping the wrong end of another stick.....just because a loss is made doesn't make for tax avoidance....neither does the fact the there is a Fringe Benefit...... the naughty avoidance bit come into play when you don't pay the FBT.
There is absolutely nothing wrong with getting a Fringe Benefit......not paying FBT when you are is.
There are even cases where normally you'd be paying FBT but are specifically exempt.....accommodation (and travel) in the course of employment is one. For hopefully obvious reasons
I don't know all the facts of your case but from what you've posted so far I don't think you made mistake. You say it's silly to invite complications, which is true......it's equally silly IMHO to pay more tax than you need to and to act on the advice of others without really understanding what's going on when it comes to tax
I really think you need to find a better accountant.....pick Rosco and we can both get a tasty $100
Cheers
Spaceman
Therefore I believe your presumption that you can simply choose which rent to pay is incorrect.
You've grasped the wrong end of the stick........I didn't say you can simply choose which rent to pay......you can of course simply choose what rent to pay, but you need to be aware of the consequences of your actions.
In example 1 there is no fringe benefit to you as you are paying both more than the market rent and more than the actual expenses.....the company will make a profit and will be taxed on that profit.
In example 2 there is no fringe benefit to you as you are paying more than the market rent and meeting actual expenses....the company won't be making a profit though and no tax will be paid.
In example 3 there is no fringe benefit to you as you are paying the market rent but the expenses aren't being met ...the company will make a loss and tax credits will accrue.
In example 4 there is a fringe benefit to you as you are paying less than market rates...the company will make a loss and tax credits will accrue....FBT will need to be paid
This is wrong ...
3. $100 loss pw, IRD views as tax avoidance
4. $200 loss pw, IRD views as tax avoidance.
4. $200 loss pw, IRD views as tax avoidance.
It's wrong, but also you're grasping the wrong end of another stick.....just because a loss is made doesn't make for tax avoidance....neither does the fact the there is a Fringe Benefit...... the naughty avoidance bit come into play when you don't pay the FBT.
There is absolutely nothing wrong with getting a Fringe Benefit......not paying FBT when you are is.
There are even cases where normally you'd be paying FBT but are specifically exempt.....accommodation (and travel) in the course of employment is one. For hopefully obvious reasons
I don't know all the facts of your case but from what you've posted so far I don't think you made mistake. You say it's silly to invite complications, which is true......it's equally silly IMHO to pay more tax than you need to and to act on the advice of others without really understanding what's going on when it comes to tax
I really think you need to find a better accountant.....pick Rosco and we can both get a tasty $100
Cheers
Spaceman
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