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Fringe benefits tax: what is the benchmark interest rate to be used for the fringe benefits tax year commencing on 1 April 2013?

Please note that the PDF version is the authorised version of this ruling.

Preamble

Exclamation This publication provides you with the following level of protection:This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953.

A public ruling is an expression of the Commissioner’s opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes.

If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you – provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you.

Ruling

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.

Example

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

Previous Rulings/Determinations:

TD 94/29

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

TD 2007/10

TD 2008/7

TD 2009/10

TD 2010/6

TD 2011/6

TD 2012/7

References ATO references: NO  1-4JELJAS

ISSN: 1038-8982

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                


ATO FBT motor vehicle data matching

How we collect the data

We obtain data from the state and territory motor vehicle registering bodies. This data is matched against taxpayer records to identify those participating in the cash economy, and who may not be declaring all their income or deliberately avoiding their tax obligations.

The motor vehicle data-matching program identifies all motor vehicles sold, transferred or newly registered in the 2011-12 and 2012-13 financial year where the transfer and/or market value is $10,000 or greater.

We have obtained data from the following state and territory motor vehicle registering bodies:

State/territory Government representative
New South Wales Roads and Maritime Services, NSW
Queensland Queensland Department of Transport and Main Roads
Victoria VicRoads Licensing and Registrations Operations
Tasmania Tasmania Department of Infrastructure, Energy and Resources, Registration and Licensing Branch
South Australia South Australia Department for Transport, Energy and Infrastructure
Western Australia Department for  Transport
Northern Territory Department of Lands and Planning
Australian Capital Territory ACT Road Department of Urban Services, Road User Services

How we use the data

We use motor vehicle data to improve compliance with tax obligations of taxpayers by:

  • identifying taxpayers whose expenditure is in excess of their reported income
  • identifying businesses that sell vehicles and do not report, or under-report those sales
  • obtaining intelligence to increase our understanding of the behaviours and compliance profile of buyers and sellers
  • developing and implementing strategies to improve voluntary compliance, including educational or audit activities as appropriate
  • helping to address potential non-compliance in the following areas
    • income tax
    • superannuation
    • goods and services tax
    • fringe benefits tax
    • luxury car tax.

Those identified as being at risk of potentially skimming some or all of their cash takings, running part of their business ‘off-the-books’, or in other ways not reporting all their income, should contact us to make a voluntary disclosure of any under-reported amounts.

In cases where individuals or businesses fail to comply with their obligations – even after being reminded of them – other action may be appropriate, including consideration for default assessments of tax liabilities.

Data-matching projects help protect honest taxpayers by deterring, detecting and dealing with those who have not complied.

http://www.ato.gov.au/content/00193907.htm


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What is the total cost of a $1,100 taxable fringe benefit?

1.  FBT – $1,056
2.  Payroll Tax – $113 (average)
3.  Workers Compensation – $103 (estimate)
4.  Benefit acquisition (less GST) – $1,000

Total cost = $2,272 = no good for salary packaging!


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