Issue
Will the taxable value of a house and land package provided by a property developer to an employee, be calculated as an 'in-house property fringe benefit' in accordance with subsection 42(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?
Decision
No. Subsection 42(1) of the FBTAA does not apply as the house and land package is not an 'in-house property fringe benefit'.
Facts
The employer is engaged in the business of property development.
The employer acquired a parcel of land and constructed a number of houses on the land.
Most of the house and land packages were sold at market price to members of the public.
During the FBT year the employer provided an employee with a house and land package at below market price.
The provision of a house and land package to the employee is a property fringe benefit in accordance with section 40 of the FBTAA.
Reasons for Decision
The taxable value of a property fringe benefit depends on whether the property benefit falls for consideration under subsection 42(1) of the FBTAA as an 'in-house property fringe benefit' or section 43 of the FBTAA as an 'external property fringe benefit'.
An 'in-house property fringe benefit' is defined in subsection 136(1) of the FBTAA to mean a property fringe benefit in relation to the employer in respect of 'tangible property', where both the following conditions are satisfied: (i) the provider is the employer or an associate of the employer; and (ii) the provider carried on a business that consisted of or included the provision of identical or similar benefits principally to outsiders.
(a) 'Tangible property' is defined as 'goods and includes animals, including fish; and gas and electricity', whereas
(b) 'Intangible property' is defined as: (i) real property; (ii) a chose in action; and (iii) any other kind of property other than tangible property, but does not include- (iv) a right arising under a contract of insurance; or (v) a lease or licence in respect of real property or tangible property;'
There is no definition of 'real property' in the FBTAA therefore it takes on its ordinary meaning. Words And Phrases - legally defined , (1990), Volume 4, 3rd Edition, Saunders JB, Butterworths, London at page 10, defines the term 'real property' as follows, ....denotes (1) land and things attached to land, so as to become part of it...'
The house and land package would clearly meet the definition of real property and consequently, intangible property. Therefore, it cannot be taxed as an 'in-house property benefit' and is not subject to the 25% in-house concession.
As such, the taxable value of the property fringe benefit is determined in accordance with section 43 of the FBTAA, as an external property fringe benefit.
Amendment History
Date of Amendment Part Comment 11 March 2026 Business Line Updated to correct business line
Date of Amendment | Part | Comment
11 March 2026 | Business Line | Updated to correct business line