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.

Outlines

00:00

💼 Understanding French Benefits and Taxation

This paragraph discusses French benefits, which are non-salary compensations given to employees, particularly those in supervisory or managerial positions. Examples of such benefits include housing money, company car memberships, and others. The tax rate for French benefits, as per the TRAIN law implemented on January 1, 2018, has been increased to 35 percent. The gross-up monetary value of the benefits given to non-rank and file employees is determined by dividing the actual monetary value by 65. The computation of the French benefit tax involves dividing the taxable monetary value by the gross-up factor and then multiplying by the French benefit tax rate of 35 percent. The paragraph also explains how to determine the monetary value of French benefits, whether they are in the form of money, property with transfer of ownership, or property without transfer of ownership. A list of 10 enumerated French benefits and their monetary values is mentioned, with examples provided for educational assistance and housing benefits, illustrating how to calculate the French benefit tax for each.

05:01

📢 Closing Remarks and Call to Action

In this closing paragraph, the speaker expresses gratitude to the viewers for their support of the channel. They invite viewers to leave comments with any suggestions for content they would like to see covered in future videos. The speaker also encourages viewers to subscribe to the channel if they haven't already done so. The paragraph ends with a personal note from the speaker, Gerard, wishing viewers a great day.

Keywords

💡Fringe Benefit

A fringe benefit is a non-monetary compensation provided to employees, often those in supervisory or managerial positions, that supplements their regular salary or wages. In the context of the video, fringe benefits can include housing, company car memberships, or other perks. The script discusses how these benefits are subject to taxation and provides examples of how their monetary value is determined for tax purposes.

💡French Benefits

French benefits, as used in the video, likely refers to a specific type of fringe benefit, possibly named due to local tax laws or historical context. The video defines these benefits and provides examples, indicating that they are subject to a 35% tax rate as of January 1, 2018, due to the implementation of the TRAIN law.

💡Tax Rate

The tax rate mentioned in the video is the percentage at which fringe benefits are taxed. As of January 1, 2018, the tax rate for French benefits was increased to 35 percent. This rate is crucial for calculating the tax liability on such benefits and is a key factor in the computations provided in the script.

💡Gross Up Factor

The gross up factor is a mathematical tool used to determine the taxable value of a fringe benefit. In the video, it is explained that the actual monetary value of a French benefit given to non-rank and file employees is determined by dividing the actual monetary value by 65, which is the gross up factor. This factor is used to compute the taxable value of the benefit before applying the tax rate.

💡Taxable Monetary Value

Taxable monetary value refers to the amount of a fringe benefit that is subject to taxation. The video explains that this value is calculated by dividing the actual monetary value of the fringe benefit by the gross up factor. This value is then used to calculate the tax due on the benefit.

💡Monetary Value

Monetary value in the context of the video refers to the actual worth of a fringe benefit, which can be in the form of money, property, or other assets. The script provides examples of how to determine the monetary value of different types of benefits, such as educational assistance or housing.

💡Property

Property, as discussed in the video, can be a type of fringe benefit provided to employees. It can include tangible assets like housing or company cars. The monetary value of property as a fringe benefit can be determined by its fair market value, assessed value, or depreciable value, depending on whether there is a transfer of ownership.

💡Transfer of Ownership

Transfer of ownership is a concept used to determine the valuation of property as a fringe benefit. If there is a transfer of ownership, the fair value of the property is used to determine its monetary value for tax purposes. This concept is important for understanding how the value of property benefits is calculated in the script.

💡Tax Code

The tax code mentioned in the video refers to the legal framework that governs taxation, including the taxation of fringe benefits. The video script refers to a list of enumerated French benefits within the tax code, which provides guidance on how to value and tax these benefits.

💡Illustration

Illustrations in the video are examples provided to demonstrate how to calculate the tax on fringe benefits. The script includes specific examples, such as educational assistance and housing, to show the step-by-step process of determining the taxable value and the resulting tax due.

Highlights

Definition of French benefits as supplemental compensation for non-rank and file employees, particularly those in supervisory or managerial positions.

Examples of French benefits include housing, money, company car, and memberships.

French benefit tax rate increased to 35 percent effective January 1, 2018, due to the implementation of TRAIN law.

Gross up monetary value of French benefits is determined by dividing the actual monetary value by 65.

Tax computation involves dividing the taxable monetary value by the gross up factor and multiplying by the French benefit tax rate.

Valuation of French benefits depends on whether the benefit is money, property with transfer of ownership, or property without transfer of ownership.

For money benefits, the face value or actual amount paid is used for valuation.

For property benefits with transfer of ownership, the fair market value is used for valuation.

For property benefits without transfer of ownership, the depreciable value is used for valuation.

There are 10 enumerated French benefits under the tax code, each with a specified monetary value.

Illustration of tax computation for an educational assistance French benefit of 78,000.

Tax computation results in a French benefit tax of 42,000 for the educational assistance example.

For housing benefits, the higher value between market, zonal, or assessed value is used for tax computation.

Tax computation for housing benefits results in a French benefit tax of 24,231.

French benefit taxes are rare in practice, but understanding their computation is beneficial.

Encouragement for viewers to engage with the content by giving a thumbs up and subscribing.

Transcripts

i'll be discussing about french benefits

so i'm going to be defining what french

benefits are and then give

some examples of french benefits that

may be subject to

taxes then discuss the evaluation of

your fringe benefit

and then give sample computations of

your french benefit tax so a fringe

benefit

is a benefit that supplements the

compensation of an employee

particularly an employee that's not rank

and file more of the

supervisory or managerial positions and

it may come

in the form of housing money

company car membership or others

so the tax rate for french benefits

effective

january 1 2018 which is actually the

implementation of your train law the

french benefit tax

is increased to 35 percent the gross up

monetary value of the

french benefit given to non-rank and

file

employees shall be determined by

dividing the actual monetary value

by 65 so to compute your french benefit

tax we have your

taxable monetary value divide that up

with your gross up factor

then multiply that with your french

benefit tax rate which is actually your

35

now in determining your monetary value

of your french benefit you have to

look into it if the benefit received by

the employee is either money or

property if it's money or paid directly

by the employer

the face value of the money or the

actual amount paid for

whereas if it's property and there is

transfer of ownership

the fair value of the property and

subject to your section 6 of your tax

code

whereas if it's property as well but

there is no transfer of ownership

the depreciable value of the property

shall be your valuation

so i listed down the examples of your

french benefit along with their

valuation or their monetary value now

under your tax code there are actually

10 french benefits that were enumerated

there you can check out the

french benefit along with the monetary

value in this

list that i've created over here

so let's go to your first illustration

the french benefit that was given by the

employer over here

is your educational assistance of 78

000. so from the monetary value of your

finch benefit which is your 78 000

we divide that by your gross up factor

of your

65 and then we'll arrive at your taxable

value of your french benefit

which is 120 000 and then we multiply

that

by your french benefit tax rate which is

your 35

so the french benefit tax is 42 000.

so let's go to your second illustration

the fringe benefit that we're talking

about here is in terms of your housing

now for tax purposes the following we're

given you have your market value

zonal value and assessed value now in

solving this we have to select whichever

is

higher between the market value zonal

value or your assessed value

so to compute your monetary value you

have your 1.8 million which is the

higher of the three

multiply that by your five percent and

then again multiply that by 50

and then we'll get your monetary value

of 45

000 so after we get the monetary

value of 45 000 that's the time we

divide that again with your 65

gross up factor and then we'll arrive

with your taxable value

of your french benefit and then multiply

that again with your french benefit tax

rate of 35

so we'll get your french benefit tax of

24

231. and that's it although french

benefit taxes are

a bit rare in terms of actual practice

it's still good if we

know how they are computed

so if you found this video very helpful

please give it a thumbs up and as always

guys a huge thanks for

supporting the channel if you have any

comments or

suggested content that you'd like me to

cover you can comment down below

and consider subscribing if you haven't

yet already

so this is gerard have a great day