8.2 Taxable value of debt waiver fringe benefits
The taxable value of a debt waiver fringe benefit is the amount of the debt that is released. For example, if you release an employee from an obligation to repay a loan of $1,000, the taxable value of the debt waiver fringe benefit is $1,000. Where the amount you waive includes an amount of principal and accrued interest (for example, $1,000 principal and $100 interest), the taxable value of the debt waiver fringe benefit is the total amount waived - that is, $1,100 in this example.
Goods and services tax (GST) does not affect the taxable value of debt waiver fringe benefits, so these benefits are always grossed up at the type 2 rate. For more on GST and fringe benefits tax (FBT), refer to What is fringe benefits tax?