Fringe Benefit Tax Explained

Summary

This video script discusses French benefits, focusing on defining them and explaining their taxation. French benefits are supplementary perks for non-rank-and-file employees, such as housing or company cars. Since 2018, the tax rate for these benefits is 35%. The script provides a method for calculating the tax by dividing the monetary value by 65 and then applying the tax rate. Examples include educational assistance and housing benefits, with detailed computations for each. The video also highlights the importance of understanding French benefit tax computations, even if they are rarely encountered in practice.

Takeaways

• 📚 French benefits are supplementary benefits given to employees, particularly those in supervisory or managerial positions.
• 💼 Examples of French benefits include housing, money, company car, and memberships.
• 📈 The tax rate for French benefits increased to 35% effective January 1, 2018, following the implementation of the TRAIN law.
• 🧮 To calculate the French benefit tax, divide the taxable monetary value by the gross-up factor (65) and then multiply by the tax rate (35%).
• 🏦 If the benefit is in the form of money, its face value or the amount paid by the employer is used for valuation.
• 🏠 For property benefits, the fair market value is used if there's a transfer of ownership, otherwise, the depreciable value is considered.
• 🔢 The script provides a detailed computation example for educational assistance with a French benefit tax of 42,000.
• 🏡 Another example given is housing benefits, where the higher of market value, zonal value, or assessed value is used for computation.
• 💼 The script lists 10 types of French benefits under the tax code, each with its monetary value.
• 👍 The presenter encourages viewers to engage with the content by liking, commenting, and subscribing for more informative videos.

Q & A

What are French benefits?

French benefits are supplementary benefits given to employees, particularly those in supervisory or managerial positions, and may come in forms such as housing, money, company car, membership, or others.

What is the tax rate for French benefits effective January 1, 2018?

The tax rate for French benefits effective January 1, 2018, is 35 percent.

How is the monetary value of a French benefit determined for tax purposes?

The monetary value of a French benefit is determined by dividing the actual monetary value by 65, which is the gross-up factor.

What is the formula to compute the French benefit tax?

To compute the French benefit tax, you take the taxable monetary value, divide it by the gross-up factor (65), and then multiply the result by the French benefit tax rate (35%).

How do you determine the monetary value of a French benefit if it's in the form of money?

If the French benefit is in the form of money and paid directly by the employer, the monetary value is the face value of the money or the actual amount paid.

What is the valuation of a French benefit if it's in the form of property with transfer of ownership?

If the French benefit is in the form of property and there is a transfer of ownership, the fair value of the property is used for valuation.

How is the monetary value of a French benefit determined if it's property without transfer of ownership?

If the French benefit is in the form of property without transfer of ownership, the depreciable value of the property is used as the valuation.

What are the 10 French benefits enumerated under the tax code?

The script does not provide the specific list of the 10 French benefits, but it mentions that they can be found in the tax code along with their monetary values.

Can you provide an example of how to calculate the French benefit tax for educational assistance?

For educational assistance of 78,000, the taxable value is calculated by dividing 78,000 by 65, resulting in a taxable value of 120,000. Multiplying this by the tax rate of 35% gives a French benefit tax of 42,000.

How is the French benefit tax computed for housing benefits?

For housing benefits, the higher value between market value, zonal value, or assessed value is used. In the example, the higher value of 1.8 million is multiplied by 5% and then by 50 to get a monetary value of 45,000. This is then divided by 65 to get the taxable value, which is then multiplied by the tax rate of 35% to get the French benefit tax of 24,231.

Why is it important to know how to compute French benefit taxes even if they are rare in practice?

It is important to know how to compute French benefit taxes to ensure compliance with tax laws and to accurately account for all forms of employee compensation, even if they are not commonly encountered in everyday practice.