Taking a partner is a fringe benefit

These questions and answers were selected from the CCH Question and Answer Service.

Question: It is our company policy to travel business class on overseas air travel.

If an employee chooses to travel economy class on a business trip and take his or her partner along (all for the equivalent cost of a business class ticket), is the partner's cost of travel subject to fringe benefit tax ?

Answer: The travel costs of the employee's partner will be subject to FBT because the employee will be deemed to receive the benefit.

Although there may be an argument that the employee and his or her partner are not "associated persons" as defined (if the two of them are not married), it is unlikely that the Inland Revenue Department and the Courts would hold the same view.

Question: Can a company claim the GST back on a holiday home which has been bought for rental purposes?

Answer: The company can claim a GST input tax credit on the holiday home only if the house is going to be used for the purposes of making a taxable supplies - ie, the company will be charging GST on any supply.

If the holiday home will be rented as a residential dwelling, this is an exempt supply on which GST cannot be charged.

Note that we have assumed the home has not been purchased from an associated person.

* For more information, visit the CCH website or phone 0800 500-224.