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You usually need to pay fringe benefit tax if:

  • you give an employee a loan at less than the prescribed or market rate of interest
  • this loan is not available to the public.

There are some exceptions to this. The following types of loans you do not have to pay FBT for, or they have different rules about when FBT applies:

  • wage advances
  • employee share loans
  • share purchase scheme loans
  • shareholder employee current account debit balances
  • company expense accounts
  • loans to life insurance policy holders.

Record keeping for low-interest loans

Your records for low interest loans must show the:

  • date the loan started
  • name of the employee receiving the loan
  • description of the loan
  • amount of interest charged
  • prescribed or market rate of interest.