Dan works for Australia Banking Ltd, an Australian bank. Australia Bank offers loans to the public at an interest rate of 6% per annum. To employees, they offer a discounted interest rate of 5%.
On 1 April 2017, Dan borrows $500,000 from Australia Bank (at 5% per annum), to buy a house (which he lives in).
(a) Calculate the amount of fringe benefits tax payable by the employer in respect of this loan (for the FBT year ended 31 March 2018).
(b) How would you answer change if Dan used the $500,000 to purchase a rental property?
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