Debt waiver fringe benefit overview
A taxable benefit arises when an employer waives an obligation of an employee to pay or repay a debt owed to the employer. The debt is in relation to the employee's employment and is not necessarily legally enforceable.
The FBT liability arises at the time when the obligation concerned is waived.
The taxable value of the benefit is the amount of the debt or the repayment that is waived. There is no reduction in the taxable value of the benefit for any consideration provided by the employee or associate for the waiver.
Where an employer (a private company) provides a loan or advancement of money to an associate of the employer, who is also a shareholder, the provision of that amount which represents a distribution out of profits, may be deemed to be a dividend paid to the associate in the capacity of a shareholder, under Division 7A of the Income Tax Assessment Act 1936. When this is the case, no debt waiver fringe benefit arises.
Latest Information
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