18.5 External residual fringe benefits
Any residual fringe benefit that is not an in-house residual fringe benefit is an external residual fringe benefit.
Commonly, an external residual fringe benefit arises where:
- you provide the residual fringe benefit but the benefit is not of a kind provided to the public in the ordinary course of business - for example, a hairdresser provides his employees with health insurance cover under a group policy taken out for the benefit of the employees
- you arrange for the residual fringe benefit to be provided by a third party - for example, a solicitor arranges for an accountant to provide discounted services to the solicitor's employees.
Taxable value of external residual fringe benefits
Where you purchased the service, right or privilege under an arm's length transaction, the taxable value is the cost price to you, less any employee contribution.
If the above rule doesn't apply, the taxable value is the amount the employee could reasonably be expected to pay to obtain the benefit under an arm's length transaction, reduced by any amount paid by the employee.
Where the period during which the benefit is provided extends past the end of the FBT year, you apportion the taxable value between the two years on a pro rata basis.