Issue
Whether a discounted home loan that is made available by a financial institution to a class of customers who satisfy certain financial criteria is an exempt loan benefit when provided to employees pursuant to subsection 17(2) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA).
Decision
Yes. A discounted home loan that is made available by a financial institution to a class of customers who satisfy certain financial criteria is an exempt loan benefit when provided to employees pursuant to subsection 17(2) of the FBTAA
Facts
The financial institution currently provides a flexible package of financial products and services. This flexible package includes an interest rate discount on housing loans provided to a class of customers. In order to qualify, the customer must fulfil certain criteria determined by the financial institution.
The financial institution proposes to offer employee loans at a discounted rate that reflects the loan rates charged to the particular class of customers.
Reasons for Decision
An exempt loan benefit arises where the employer is engaged in the business of money lending and the interest rate on a loan to an employee is fixed at a rate at least equal to the interest applicable under a comparable loan made to a member of the public in the ordinary course of business at about the time the loan was made to the employee.
It is considered that a loan benefit which is based on the discounted home loan that is made available to a particular class of customers would qualify as an exempt loan benefit because the a class of customers are considered to be members of the public.