ATO Interpretative Decision
ATO ID 2003/157
Fringe Benefits Tax
Remote area housing: reduction of taxable value - remote area housing loan interestFOI status: may be released
-
This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Is the employer entitled to claim a 50% reduction in the taxable value of the expense payment fringe benefit, as it relates to interest in respect of a remote area housing loan, pursuant to subsection 60(2) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?
Decision
Yes, because the expense payment fringe benefit is a reimbursement of the employee's interest incurred in relation to the employee's remote area housing loan.
Facts
The employee owns land on which there is a house. The employee lives in the house which is his or her usual place of residence.
The employee has a housing loan with a bank. The loan was entered into to enable the employee to purchase the land and house.
The employee is a current employee of the employer. The dwelling is situated in a remote area. The employee works in a remote area. In the employer's industry it is customary to provide housing assistance to employees.
The loan is a remote area housing loan connected with a dwelling as required by paragraph 60(2)(b) and subsection 142(1) of the FBTAA.
The employee incurs $5,000 interest in relation to the housing loan. The employer reimburses the full amount of the $5,000 interest expense incurred. This reimbursement is an expense payment fringe benefit as defined in subsection 136(1) of the FBTAA.
There is no recipient's contribution made by the employee to the employer.
Paragraph 60(2)(d) of the FBTAA is about not allowing non-arm's length arrangements or arrangements entered into for the purposes of obtaining the tax concessions available under section 60. Paragraph 60(2)(d) does not apply to this arrangement.
Alternative facts
The facts as above continue to apply with the following exception.
Instead of the employer reimbursing the full amount of the $5,000 interest expense incurred, the employer only reimburses (in part), half of the $5,000 interest expense incurred. This reimbursement, $2,500, is an expense payment fringe benefit as defined in subsection 136(1) of the FBTAA.
Reasons for Decision
The recipient of the $5,000 (or $2,500) expense payment fringe benefit is the employee of the employer. Paragraph 60(2)(a) of the FBTAA is satisfied.
Recipients' expenditure, as defined in section 136(1) of the FBTAA means, in relation to an expense payment benefit, the expenditure incurred by the recipient as described in paragraph 20(b) of the FBTAA.
The expenditure incurred by the recipient as described in 20(b) of the FBTAA is the amount of the interest expense incurred by the employee, $5,000.
The loan is a remote area housing loan connected with a dwelling as required by paragraph 60(2)(b), and subsection 141(1) and subsection 142(1) of the FBTAA.
Accordingly, the $5,000 interest expense is recipients' expenditure which is in respect of a remote area housing loan connected with a dwelling. Paragraph 60(2)(b) of the FBTAA is satisfied.
The employee lives in the dwelling as his or her usual place of residence. Paragraph 60(2)(c) of the FBTAA is satisfied.
Paragraph 60(2)(d) of the FBTAA does not apply.
Subsection 60(2) of the FBTAA is satisfied. Accordingly, the employer is entitled to a 50% reduction of the taxable value of the expense payment fringe benefit.
Example calculation
Based on the facts (and alternative facts) contained above, the reduction in taxable value of the expense payment fringe benefit would be calculated as follows:
| $(facts) | $(alternative facts) | |
| Expense payment fringe benefit | 5,000 | 2,500 |
| Less 'recipients' contribution' | nil | nil |
| Taxable value before reduction | 5,000 | 2,500 |
| Less subsection 60(2) reduction, 50% of taxable value, (50% x $5,000 or 2,500) | 2,500 | 1,250 |
| Reduced taxable value | 2,500 | 1,250 |
Amendment History
| Date of Amendment | Part | Comment |
|---|---|---|
| 26 June 2026 | Facts, Reason for Decision | Punctuation amendments, law update & business line |
| 25 January 2019 | Reasons for Decision | Delete unnecessary single quotation mark. |
| 27 May 2016 | Facts, Reason for Decision | Minor punctuation amendments |
Year of income: Year ended 31 March 2002
Legislative References:
Fringe Benefits Tax Assessment Act 1986
paragraph 20(b)
subsection 60(2)
paragraph 60(2)(a)
paragraph 60(2)(b)
paragraph 60(2)(c)
paragraph 60(2)(d)
subsection 136(1)
subsection 141(1)
subsection 142(1)
ATO ID 2003/158
ATO ID 2003/159
ATO ID 2003/160
Keywords
Expense payment fringe benefits
FBT expense payment
FBT housing loan
FBT interest on loans
FBT remote area housing
FBT taxable value
Fringe benefits
Fringe benefits tax
Reduction of taxable value
Date reviewed: 23 April 2026
ISSN: 1445-2782
| Date: | Version: | |
| 14 January 2003 | Original statement | |
| 27 May 2016 | Updated statement | |
| 25 January 2019 | Updated statement | |
| You are here | 26 June 2026 | Updated statement |
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
