Sample Business Studies Coursework Paper on Change and Continuity in Fringe Benefit Taxation: Seeking Sense and Sensibility

Chapter 8 Questions

Question 5:

Fringe benefits such as health and education insurance covers are exempted from taxation, hence the exclusion is the taxation advantage gained through such benefits. On the other hand the employers incur costs in providing such benefits to employees since insurance and other fringe benefit companies charge premiums for their services. The lack of immediate cash remuneration is the major reason why some employees prefer salaries and wages to the non- cash benefits of employment (Kaplan and Price 287).

Question 6:

In cases where an employee incurs lodging, entertainment and meal costs for the benefit of the employer, the latter is obliged to reimburse them for the same. In such cases i.e. when the employee is where they are not by their liking but because is a work demand, the IRS considers the reimbursements to be tools of the trade rather than compensation. The revenue benefits associated with the reimbursements affect the decision to reimburse or not. The employer often decides which costs are worth incurring before sending out the employee where entertainment and meals have to be catered for (Kaplan and Price 288).

Question 7:

Discretionary bonus plans can be vehicles for tax attractiveness when the factors leading to the discretion are well stipulated within the bonus specifications. In cases where such factors are clearly stated and fulfilled completely, the employers may be incentivized to provide the bonus. However, employers may also renege on providing the bonus when the conditions of discretion are not well stated or not accomplished wholly. The employer must however exercise high standards of reasonableness in deciding on the status of bonuses. Different countries have different requirements for discretionary bonuses (Watts and Others par. 11- 13).

Questions 8:

  1. True
  2. True
  3. True
  4. False

Works Cited

Kaplan, Richard L. and Price, Dawson J. Change and continuity in fringe benefit taxation: seeking sense and sensibility. New York Law School Review 59, 15(2014), 285- 306. Retrieved from www.nylslawreview.com/wp-content/uploads/sites/16/2015/03/Volume-59-2.Kaplan-Price.pdf

Watts, Sylvie, Gemson, Felicity and Overy, Allen. Designing executive pay packages: a balancing act. Thomson Reuters Practical Law. Retrieved from ca.practicallaw.thomsonreuters.com/1-102-6664?transitionType=Default&contextData=(sc.Default)&__lrTS=20170510155535855&firstPage=true&bhcp=1