Loan fringe benefits
Loan Fringe Benefits arise where an employer recognises they have mistakenly paid their employee an amount to which the employee was not legally entitled. The employee is then obliged to repay the amount afterwards, but is given time to repay the amount.
By allowing time for the repayment of the mistakenly paid amount the employer is effectively making a loan to the employee. This loan gives rise to a loan benefit for the fringe benefits tax year. The benchmark interest rate for the 2007/08 FBT year is 8.05 per cent for the period that the loan is outstanding.
