Taxation Determination

TD 2001/4

Fringe benefits tax: what is the benchmark interest rate to be used for the fringe benefits tax (FBT) year commencing on 1 April 2001?

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FOI status:

may be releasedFOI number: I 1024822

1. The benchmark interest rate for the FBT year commencing on 1 April 2001 is 7.55 per cent per annum. This rate replaces the rate of 7.30 per cent that has applied for the previous year.

2. The rate of 7.55 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

On 1 April 2001 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%). In the current year the taxable value is $1,275 [(50,000 x 7.55 ) - $2,500].

Note

3. 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
26 April 2001

Not previously issued in draft form

References

ATO references:
NO T2000/007531

Related Rulings/Determinations:

TD 94/29
TD 95/20
TD 96/17
TD 97/8
TD 98/6
TD 98/22
TD 1999/2
TD 2000/19

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 1997 Part III Div 7A