Taxation Determination

TD 2002/13

Fringe benefits tax: what is the benchmark interest rate to be used for the fringe benefits tax (FBT) year commencing on 1 April 2002?

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FOI status:

may be released

Preamble
The number, subject heading, date of effect and paragraphs 1 and 2 of this Taxation Determination are a 'public ruling' for the purposes of Part IVAAA of the Taxation Administration Act 1953 and are legally binding on the Commissioner. The remainder of the Determination is administratively binding on the Commissioner. Taxation Rulings TR 92/1 and TR 97/16 together explain how a Determination is legally or administratively binding.
Date of Effect
This determination applies for the FBT year commencing on 1 April 2002. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

1. The benchmark interest rate for the FBT year commencing on 1 April 2002 is 6.05 per cent per annum. This rate replaces the rate of 7.55 per cent that has applied for the previous year.

2. The rate of 6.05 per cent is used to calculate the taxable value of:

a fringe benefit provided by way of a loan;
a car fringe benefit where an employer chooses to value the benefit using the operating cost method.

Example

3. On 1 April 2002 an employer lends an employee $50,000 for five years at an interest rate of 5% per annum. Interest is charged and paid 6 monthly and no principal is repaid until the end of the loan. The actual interest payable by the employee for the current year is $2,500 (50,000 x 5%). The notional interest, with a 6.05 per cent benchmark rate, is $3,025. The taxable value is $525 ($3,025 - $2,500).

Note: FBT does not apply to a loan in relation to a shareholder in a private company, or an associate of such a shareholder, that causes (or will cause) the private company to be taken under Division 7A of Part III of the Income Tax Assessment Act 1936 to pay the shareholder or associate a dividend.

Commissioner of Taxation
29 May 2002

Not previously released in draft form.

References

ATO references:
NO T2000/007531

ISSN: 1038-8982

Related Rulings/Determinations:

TR 92/1
TR 92/20
TR 97/16
TD 94/29
TD 95/20
TD 96/17
TD 97/8
TD 98/6
TD 98/22
TD 1999/2
TD 2000/19
TD 2001/4

Subject References:
car fringe benefits
FBT benchmark interest rate
fringe benefits tax
loan fringe benefits

Legislative References:
FBTAA 1986 11(2)
FBTAA 1986 18
FBTAA 1986 19
FBTAA 1986 136(1)
ITAA 1936 Part III Div 7A

TD 2002/13 history
  Date: Version: Change:
You are here 29 May 2002 Original ruling  
  11 May 2016 Withdrawn  

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