• Calculating taxable value of a loan fringe benefit

    The taxable value of a loan fringe benefit is the loan amount multiplied by the difference between the rate of interest charged by the entity and the statutory rate of interest. The interest is to be calculated on the outstanding daily balance of the loan.

    Attention

    The statutory rate of interest is set by reference to the standard variable rate for owner occupier housing loans of the major banks that the Reserve Bank of Australia published most recently before the beginning of the FBT year. The ATO publishes a taxation determination, usually in April, that specifies the statutory interest rate for the current FBT year.

    End of attention

    The overpayment of salary does not constitute a loan benefit as payments of salary or wages are excluded from the definition of fringe benefit. However, a loan benefit may arise where an agreement is entered into whereby an employee is given time to repay overpaid amounts. The benefit arises from the date of the agreement, rather than from the date of the overpayment.

      Last modified: 17 Jul 2012QC 21998