Fringe Benefits Tax Assessment Act 1986

PART III - FRINGE BENEFITS  

Division 4 - Loan fringe benefits  

Subdivision A - Loan benefits  

SECTION 17   EXEMPT LOAN BENEFITS  

17(1)   [Loan as part of business and fixed arm's length interest rate]  

Where:

(a) a loan is made by a person who carries on a business that consists of or includes making loans to members of the public; and

(b) the rate of interest payable in respect of the loan:

(i) is specified in a document in existence at the time the loan is made;

(ii) is not less than the rate of interest in respect of a similar arm's length loan made by the person, at or about that time, to a member of the public in the ordinary course of carrying on that business; and

(iii) cannot be varied;

the making of the loan is an exempt benefit.

17(2)   [Loan as part of business and variable arm's length interest rate]  

Where:

(a) a loan is made by a person who carries on a business that consists of or includes making loans to members of the public; and

(b) the rate of interest from time to time payable in respect of the loan in respect of a year of tax is not less than the rate of interest applicable at the time concerned in respect of a similar arm's length loan made by the person, at or about the time the loan referred to in paragraph (a) is made, to a member of the public in the ordinary course of carrying on that business;

the making of the loan is an exempt benefit in relation to that year of tax.

17(3)   [Advance to current employee to meet employment-related expenses]  

Where:

(a) a loan consists of an advance by an employer to a current employee of the employer in respect of his or her employment;

(b) the sole purpose of the making of the loan is to enable the employee to meet expenses incurred by the employee:

(i) in the course of performing the duties of that employment; and

(ii) not later than 6 months after the loan is made;

(c) the amount of the loan does not substantially exceed the amount of those expenses that could reasonably be expected to be incurred by the employee; and

(d) the employee is required:

(i) to account to the employer, not later than 6 months after the loan is made, for expenses met from the loan; and

(ii) to repay (whether by set-off or otherwise) any amount not so accounted for;

the making of the loan is an exempt benefit.

17(4)   [Exempt loan]  

Where:

(a) the making of a loan consisting of an advance by an employer to an employee of the employer constitutes a benefit in respect of the employment of the employee in respect of a year of tax (in this subsection called the current year of tax );

(b) the sole purpose of the making of the loan is to enable the employee to pay any of the following amounts payable by the employee in respect of accommodation:

(i) a rental bond;

(ii) a security deposit in respect of electricity, gas or telephone services;

(iii) any similar amount;

(c) the employee is required to repay (whether by set-off or otherwise) the loan not later than 12 months after the loan is made;

(d) any of the following benefits is provided in, or in respect of, any year of tax to the employee in respect of that employment:

(i) an expense payment benefit where the recipients expenditure is in respect of a lease or licence in respect of that accommodation;

(ii) a housing benefit where the housing right is in respect of that accommodation;

(iii) a residual benefit where the recipients benefit is constituted by the subsistence of a lease or licence in respect of that accommodation; and

(e) either of the following subparagraphs apply:

(i) by virtue of section 21 or subsection 47(5) , the benefit referred to in paragraph (d) is an exempt benefit in relation to the year of tax referred to in that paragraph;

(ii) the benefit referred to in paragraph (d) is a fringe benefit in relation to the year of tax referred to in that paragraph and, under section 61C , the taxable value of the fringe benefit is reduced by the extent to which that taxable value is attributable to the subsistence of a lease or licence in respect of the accommodation during a particular period in that year of tax;

the making of the loan is an exempt benefit in relation to the current year of tax.