Although a loan benefit will arise from the repayment of overpaid salary over a period of time, an FBT liability will not arise from all such arrangements. Depending on the facts of the situation, the recovery of overpaid salary by instalment arrangements may be an exempt minor benefit.

In determining whether an FBT liability arises from a repayment of overpaid salary it will be necessary to consider a number of factors including:

  • whether the overpayment to the employee is a 'one-off' occurrence
  • whether any other loan benefits have been provided to the employee
  • the period of the year for which the loan was provided
  • the amount of the overpayment.

An exemption is also available for advances to current employees:

  • to meet work-related expenses that are required to be acquitted within six months of the loan being made and any balance repaid
  • that are repayable with 12 months, paid solely to fund rental bonds or security deposits for utilities or similar amounts in respect of an exempt accommodation benefit or that are eligible for a reduction in taxable value under the temporary accommodation provisions.
    Last modified: 17 Jul 2012QC 21998