• 8.12 Exempt loans

    A loan benefit may be exempt from FBT in any of the following circumstances.

    • If, as an employer, you are engaged in the business of lending money and the interest rate on a loan to an employee is fixed at a rate at least equal to the interest on a comparable loan made to a member of the public in the ordinary course of business at about the time the loan was made to the employee.
    • If you are engaged in a business of lending money and, for each FBT year over which the loan extends, the rate of interest is variable but never less than the arm's length rate, you charge on loans made at about the time the loan was made to the employee.
    • You advance money to an employee solely to meet expenses to be incurred within six months of the advance being made. The expense must be incurred in carrying out duties of employment with you, the employer who made the advance. It must be accounted for by the employee and any excess advance refunded or otherwise offset.
    • An advance, repayable within 12 months, is made to an employee solely to pay a security deposit on accommodation - for example, a rental bond or service connection deposit. The accommodation must give rise to an exempt benefit, as explained in section 20.4 of Fringe benefits tax exempt benefits, or must be temporary accommodation eligible for a reduced taxable value in accordance with the relocation concessions (refer to section 19.4 of Reductions in fringe benefit taxable value).
      Last modified: 03 Jul 2012QC 17821