Calculating the taxable value of housing fringe benefits

The taxable value of a housing fringe benefit is measured by reference to the market value of the right to occupy the unit of accommodation. This is generally equal to the market value rent for a similar property.

The market value rent for houses that are owned by an entity can be obtained from a local real estate agent. Real estate agents can generally provide rental rates for a property of a similar size in a comparable location. This value can be used as the base value and indexed each year in accordance with the rent sub-group of the national consumer price index published by the ATO. The indexation method can be used for the valuation year and a further nine consecutive FBT years.

In the event of a down turn in market rental values, better practice entities will seek an updated market rental valuation. This will minimise the FBT payable on the provision of housing fringe benefits. The updated valuation can then be used for that FBT year and a further nine consecutive FBT years.

The market value rent for a leased property will generally be the amount of rent paid for the property, provided the leasing arrangement is at arm's length. In the event that the leasing arrangement is not at arm's length, entities can request a market value rent from a real estate agent.

    Last modified: 17 Jul 2012QC 21998