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ATO Interpretative Decision

ATO ID 2001/716

Fringe Benefits Tax

Fringe Benefits Tax: Exempt loan benefits
FOI status: may be released

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  • This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Whether a discounted home loan that is made available by a financial institution to a class of customers who satisfy certain financial criteria is an exempt loan benefit when provided to employees pursuant to subsection 17(2) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA).

Decision

Yes. A discounted home loan that is made available by a financial institution to a class of customers who satisfy certain financial criteria is an exempt loan benefit when provided to employees pursuant to subsection 17(2) of the FBTAA

Facts

The financial institution currently provides a flexible package of financial products and services. This flexible package includes an interest rate discount on housing loans provided to a class of customers. In order to qualify, the customer must fulfil certain criteria determined by the financial institution.

The financial institution proposes to offer employee loans at a discounted rate that reflects the loan rates charged to the particular class of customers.

Reasons for Decision

An exempt loan benefit arises where the employer is engaged in the business of money lending and the interest rate on a loan to an employee is fixed at a rate at least equal to the interest applicable under a comparable loan made to a member of the public in the ordinary course of business at about the time the loan was made to the employee.

It is considered that a loan benefit which is based on the discounted home loan that is made available to a particular class of customers would qualify as an exempt loan benefit because the a class of customers are considered to be members of the public.

Date of decision:  5 September 2001

Year of income:  Year ended 31 March 2002 Year ended 31 March 2003 Year ended 31 March 2004 Year ended 31 March 2005

Legislative References:
Fringe Benefits Tax Assessment Act 1986
   Subsection 17(2)

Keywords
FBT exempt loan benefits

Business Line:  CoE(FBT)

Date of publication:  30 November 2001

ISSN: 1445-2782

history
  Date: Version:
You are here → 5 September 2001 Original statement
  13 September 2005 Archived

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