Taxation Determination
TD 2007/10
Fringe benefits tax: what is the benchmark interest rate to be used for the fringe benefits tax year commencing on 1 April 2007?
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Ruling
1. The benchmark interest rate for the fringe benefits tax (FBT) year commencing 1 April 2007 is 8.05 per cent per annum. This rate replaces the rate of 7.30 per cent that has applied for the previous FBT year commencing 1 April 2006.
2. The rate of 8.05 per cent is used to calculate the taxable value of:
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- a fringe benefit provided by way of a loan; and
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- a car fringe benefit where an employer chooses to value the benefit using the operating cost method.
Example
3. On 1 April 2007 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 8.05 per cent benchmark rate, is $4,025. The taxable value is $1,525 ($4,025 - $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.
Date of effect
4. This determination applies to the FBT year commencing on 1 April 2007.
Commissioner of Taxation
28 March 2007
Previously issued as TD 2006/24
References
ATO references:
NO 2007/3869
Previous Rulings/Determinations:
TD 1995/52
TD 94/29
TD 95/20
TD 96/17
TD 97/8
TD 98/6
TD 1999/2
TD 2000/19
TD 2001/4
TD 2002/13
TD 2003/8
TD 2004/12
TD 2005/8
TD 2006/24
Subject References:
car fringe benefits
FBT benchmark interest rate
fringe benefits tax
loan fringe benefits
Legislative References:
ITAA 1936 Pt III Div 7A
TAA 1953
| Date: | Version: | Change: | |
| You are here | 28 March 2007 | Original ruling | |
| 25 May 2016 | Withdrawn |