FRINGE BENEFITS TAX ASSESSMENT ACT 1986

PART III - FRINGE BENEFITS  

Division 4 - Loan fringe benefits  

Subdivision B - Taxable value of loan fringe benefits  

SECTION 19   REDUCTION OF TAXABLE VALUE - OTHERWISE DEDUCTIBLE RULE  

19(1)  


Where:


(a) the recipient of a loan fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer; and


(b) if the recipient had, on the last day of the period (in this subsection called the loan period ) during the year of tax when the recipient was under an obligation to repay the whole or any part of the loan, incurred and paid unreimbursed interest (in this subsection called the gross interest ), in respect of the loan, in respect of the loan period, equal to the notional amount of interest in relation to the loan in relation to the year of tax - a once-only deduction (in this subsection called the gross deduction ) would, or would if not for section 82A of the Income Tax Assessment Act 1936 , and Divisions 28 and 900 of the Income Tax Assessment Act 1997 , have been allowable to the recipient under either of those Acts in respect of the gross interest; and


(ba) the amount (in this subsection called the notional deduction ) calculated in accordance with the formula:


GD   -   RD


where:

GD is the gross deduction; and

RD is:

  • (i) if no interest accrued on the loan in respect of the loan period - nil; or
  • (ii) if interest accrued on the loan in respect of the loan period - the amount (if any) that would, or that would but for section 82A of the Income Tax Assessment Act 1936 , and Divisions 28 and 900 of the Income Tax Assessment Act 1997 , have been allowable as a once-only deduction to the recipient under the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997 in respect of that interest if that interest had been incurred and paid by the recipient on the last day of the loan period;

  • exceeds nil; and


    (c) except where the fringe benefit is:


    (i) an employee credit loan benefit in relation to the year of tax; or

    (ii) an employee share loan benefit in relation to the year of tax;
    the recipient gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, in respect of the loan concerned; and


    (ca) where:


    (i) (Repealed by No 178 of 1999)

    (ii) the loan fringe benefit is a car loan benefit in respect of a car held by the recipient during a period (in this subsection also called the holding period ) in the year of tax; and

    (iii) the substantiation rules set out in Division 15 have been complied with in relation to the car in relation to the holding period;
    the following conditions are satisfied:

    (iv) the recipient gives to the employer, before the declaration date, a car substantiation declaration for the car for the year of tax;

    (v) in a case where the substantiation rules require log book records or odometer records to be maintained by or on behalf of the recipient in relation to the car - the car substantiation declaration is accompanied by a copy of those documents; and


    (d) if:


    (i) paragraph (ca) does not apply; and

    (ii) the loan fringe benefit is a car loan benefit in respect of a car held by the recipient during a period (the holding period ) in the year of tax;
    the recipient gives a declaration to the employer, before the declaration date and in a form approved by the Commissioner, that purports to set out:

    (iii) the holding period; and

    (iv) the number of whole business kilometres travelled by the car during the holding period; and

    (v) the number of whole kilometres travelled by the car during the holding period;

    the taxable value, but for Division 14 , of the loan fringe benefit in relation to the year of tax is the amount calculated in accordance with the formula:


    TV   -   ND

    where:

    TV is the amount that, but for this subsection and Division 14 , would be the taxable value of the loan fringe benefit in relation to the year of tax; and

    ND is:


    (e) if neither paragraph (ca) nor (d) applies and paragraph (i) does not apply - the notional deduction; or


    (f) if paragraph (ca) applies and paragraph (i) does not apply - whichever of the following amounts is applicable:


    (i) if it would be concluded that the amount of interest that has accrued on the loan in respect of the loan period would have been the same even if the loan fringe benefit were not applied or used in producing assessable income of the recipient - the business use percentage of the amount that, but for this subsection and Division 14 , would be the taxable value of the loan fringe benefit in relation to the year of tax;

    (ii) if subparagraph (i) does not apply - the business use percentage of the notional amount of interest in relation to the loan in relation to the year of tax; or


    (g) where:


    (i) paragraph (d) applies; and

    (ii) (Repealed by No 162 of 2015)

    (iia) paragraph (i) does not apply;
    whichever of the following amounts is the least:

    (iii) the notional deduction;

    (iv) if it would be concluded that the amount of interest that has accrued on the loan in respect of the loan period would have been the same even if the loan fringe benefit were not applied or used in producing assessable income of the recipient - 33 1/3 % of the amount that, but for this subsection and Division 14 , would be the taxable value of the loan fringe benefit in relation to the year of tax;

    (v) if subparagraph (iv) does not apply - 33 1/3 % of the notional amount of interest in relation to the loan in relation to the year of tax; or


    (h) (Repealed by No 162 of 2015)


    (i) if, under subsection 138(3) , the loan fringe benefit is deemed to have been provided to the recipient only - the amount calculated in accordance with subsection (5).

    19(2)  


    Where a part of a loan to which a loan fringe benefit relates is used by an employee to:


    (a) purchase a particular car; or


    (b) pay a Division 28 car expense;

    subsection (1) and the definition of car loan benefit in subsection 136(1) apply as if that part of the loan had been a separate loan.

    19(3)  
    (Repealed by No 162 of 2015)

    19(4)  
    (Repealed by No 162 of 2015)

    19(5)  


    For the purposes of paragraph (1)(i) (which applies to a loan fringe benefit that, under subsection 138(3) , is deemed to have been provided to an employee only), the amount is calculated in accordance with the formula:


    Unadjusted ND × Employee ' s percentage of interest

    where:

    employee ' s percentage of interest
    :

  • (a) is the percentage of the interest held by the employee, during a period (in this subsection called the holding period ) in the year of tax, in the asset or other thing that:
  • (i) is purchased or paid for using all or part of the loan to which the loan fringe benefit relates; and
  • (ii) is applied or used for the purpose of producing assessable income of the employee; and
  • (b) does not include the percentage of the interest held in that asset or other thing by the employee ' s associate or associates during the holding period.
  • unadjusted ND
    is the amount that would be ascertained as representing the component ND in the formula in subsection (1) if paragraph (1)(i) did not apply in relation to the loan fringe benefit.




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