Fringe benefits tax: what is the benchmark interest rate to be used for the fringe benefits tax year commencing on 1 April 2013?
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1. The benchmark interest rate for the fringe benefits tax (FBT) year commencing on 1 April 2013 is 6.45 per cent per annum. This rate replaces the rate of 7.40 per cent that has applied for the previous FBT year commencing on 1 April 2012.
2. The rate of 6.45 per cent is used to calculate the taxable value of:
- a fringe benefit provided by way of a loan; and
- a car fringe benefit where an employer chooses to value the benefit using the operating cost method.
3 . On 1 April 2013 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 × 5%). The notional interest, with a 6.45% benchmark rate, is $3,225. The taxable value is $725 ($3,225 – $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 2013.
Commissioner of Taxation
27 March 2013
Not previously issued as a draft
References ATO references: NO 1-4JELJAS
Subject References: fringe benefits tax FBT benchmark interest rate loan fringe benefits car fringe benefits
Legislative References: ITAA 1936 Pt III Div 7A TAA 1953