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John was employed by Z PLC at a salary of 35,000 a year. He was provided with a computer for private use on 6 November, 2013.The market value of the computer when first provided to an employee for private use was 3,600 and had a market value of 2,000 when provided to john for private use.Z PLC gave the computer to john on 5 April,2015 when it had market value of 1,000.
My answer ; the taxable benefit is the higher of 1,000 I.e current market value and 2,000 -(17/12*2,000*20/100)=1,4333. but the answer r given is 3,300. pls help me out.Hi, the answer is really 3300. I wish i could take a pic of my solution on my whiteboard lol but i’ll type it out. Tell me if you get it
Ok so remember you need to choose the greater of: “MV when gift was 1st provided less Price paid by employer” vs “MV of asset when when 1st provided less any benefits from use of asset less price paid by employer”
So… the 1st option would be 2000-0 = 2000 (they didn’t give us any info on how much the employer paid)
and the second option: 3600 – (3600 * 20% * 5/12) – 0 = 3300
(remember the first employee only had that asset for 5months. Hence the 5/12)
Hence the greater option would be the 3300.
~ hope this was helpful (and hope i made sense loll)My wording may be a tad off… but i think that’s how you’re supposed to get the soln,
To Nikki
please, take note of the statement in the question that Z PLC gave the computer to john on 5 April,2015.the usage by john is not only 5 months in 2013/2014 but up to April, 2015 in 2014/2015. Thus 3600-(3600 *20%*17/12) = 2,580 should be the right approach.Ok ok i see what you mean… i’m now seeing it’s 5th April 2015 (thought it was 2014 loll)
You should post this on the ask tutor forum; they’re the best people to clear this up.
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