The flayer point received by Rosemary as a reward of customer royalty is not taxable. This is because of the following explanation;
1. Introduction
Australian Taxation Office widened the scope of collection of taxes in fringe benefits whereby flyer points are also taxed in the fringe benefits tax, Australian Taxation Office added to the 1999 Taxation Ruling that deals with fringe benefits tax in regard to reward gotten under “flyer points”including other identical customer loyalty programs. The ruling ordered that all flight rewards gotten under the loyalty rewards are in general not taxable.
2. Exception
This rule has exception circumstances where the flyer reward may be taxed, they include; Flight-royalty reward can be subject fringe benefit tax where the individual in personal contract happens to be an employer who is providing the “flyer points” given to worker who happens to be a family member in regards to the employment. This means, Fringe Benefit Tax will only affect where the employee and the employer are family related and that flight reward payments are given in relations with employment.For instance in the Payne’s case 1999 the Federal Court observed that the flight rewards gotten in consumer loyalty promotions are not income meaning that they are not subject to Fringe Benefit Tax. The reason was that the rewards in this case were given because of a personal agreement betweena taxpayer and a company that provided consumer loyalty reward to its customer. Another exception to this rule is the case where the flight rewards are given to an employee or employee’s trustee in an arrangement that emanate from business expenses. Flight rewards received by an individual who offer a service or has gotten the flight reward because of business expenses where the individual give service on the account that he or she is entitled for flight reward.This means, that