Private ruling: Exempt loan fringe benefits
Date of advice: 12 October 2021
Published: December 2021
Ruling period: FBT year ended 31 March 20XX | FBT year ended 31 March 20XX | FBT year ended 31 March 20XX | FBT year ended 31 March 20XX
Date scheme commenced: 1 April 20XX

Ruling: A7: Yes.

Relevant facts and circumstances: The employer is an entity based in Australia that provides products and services to all members of the public, which include the provision of loans, credit cards and insurance. As part of its employee incentive program, the employer intends to introduce a 'Staff Lending Policy'. Under this policy, the employer will provide their employees with: 1. variable interest rate home loans at an interest rate equal to the lowest variable interest rate offered to members of the public, where employees will not need to satisfy the loan-to-value (LVR) requirements that otherwise apply to members of the public for these home loan products 2. fixed interest rate home loans at an interest rate equal to the lowest fixed interest rate offered to members of the public, where employees will not need to satisfy the LVR requirements that otherwise apply to members of the public for these home loan products, and 3. discounts on the insurance products it sells to the public. Home loan incentives The employer offers a range of variable interest rate and fixed interest rate home loan products to the public. Under the Staff Lending Policy, the employer is seeking to offer employees variable and fixed interest rate home loans on the same documentation and with similar terms and conditions to those offered to members of the public, though at the lowest variable and fixed interest rates offered to the public. The current lowest standard variable interest rate offered to members of the public is X% and the current lowest standard fixed interest rate is Y%. Both of these rates are as currently advertised on the employer's website. Employees will not need to satisfy the LVR requirements that otherwise apply to members of the public for these home loan products. This is because their credit risk profile is lower by virtue of transparency of the relevant employee's salary and the employer's knowledge of employment security. With specific regard to the variable home loans offered to employees under the Staff Lending Policy, the employer will offer some additional features not available with their variable interest rate home loan (but are available with a variety of other home loans offered to the public), which include an Offsetting facility and a Redraw facility. To the extent that the Offsetting and Redraw facilities are not offered to members of public as part of the variable interest rate home loan package, these facilities will cease to be available to an employee upon termination of employment. Offsets and redraws revert to the normal product rate at the time the employee resigns. The employer does not currently charge additional fees to customers (such as loan establishment fees). Under the Staff Lending Policy, the employer will not offer a variable/fixed interest rate home loan to employees at a rate lower than the variable/fixed interest rate available to members of the public. The employees will also still be subject to the same credit checks and credit vetting process that the employer undertakes for members of the public who apply for these products. The discounted interest rate offered to employees as part of the Staff Lending Policy will cease to apply upon the termination of employment. As part of the employer's product offering, customers who take out certain home loan products are entitled to a credit card, with an interest rate for unpaid balances equal to the corresponding home loan product taken out. The employer intends to extend this offer to employees who take out either a variable rate home loan or a fixed rate home loan. Insurance incentives The employer also offers insurance products to members of the public. These are third party insurance products that are provided by the employer. The employer sells these products through the ordinary course of their business dealing with customer queries. However, any claims are ultimately made directly to the third party. Under the Staff Lending Policy, the employer will also offer its employees discounts on the insurance products it sells to the public. The employer will waive the commission received from the insurance provider for employees on all general insurance products and the employees pay premiums directly to the insurance provider. That is, an employee will be able to acquire the policy at arm's length cost price (the commission that the employer would ordinarily charge to customers is waived). Insurance products sold to employees under the employer's Staff Lending Policy will not be discounted below the cost price (commission) that the employer receives for the sale of the insurance products. The insurance products will not be provided as part of a salary packaging arrangement.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 section 16 | Fringe Benefits Tax Assessment Act 1986 section 17 | Fringe Benefits Tax Assessment Act 1986 section 40 | Fringe Benefits Tax Assessment Act 1986 section 45 | Fringe Benefits Tax Assessment Act 1986 section 49 | Fringe Benefits Tax Assessment Act 1986 section 62 | Fringe Benefits Tax Assessment Act 1986 section 136

Reasons for decision: Detailed Reasoning - Question 1.1: Will a variable interest rate home loan made to an employee under the employer's Staff Lending Policy constitute an exempt loan benefit under subsection 17(2) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | Summary: A variable interest rate home loan made to an employee under the employer's Staff Lending Policy will be an exempt loan benefit under subsection 17(2) of the FBTAA. | Detailed Reasoning - Detailed reasoning: Section 16 of the FBTAA provides that a loan benefit will arise when an employer makes a loan to an employee. However, a loan will be an exempt loan benefit where section 17 of the FBTAA applies. This includes certain situations where a loan is made by an employer who is engaged in the business of moneylending. Subsection 17(2) of the FBTAA provides that certain loans are to be treated as exempt benefits where: (a) a loan is made by a person who carries on a business that consists of or includes making loans to members of the public; and (b) the rate of interest from time to time payable in respect of the loan in respect of a year of tax is not less than the rate of interest applicable at the time concerned in respect of a similar arm's length loan made by the person, at or about the time the loan referred to in paragraph (a) is made, to a member of the public in the ordinary course of carrying on that business. The specific requirements of paragraphs 17(2)(a) and 17(2)(b) of the FBTAA must be considered in relation to the present circumstances to determine whether variable interest rate home loans made to employees by the employer will be exempt from Fringe Benefits Tax (FBT) under subsection 17(2). | Detailed Reasoning - 17(2)(a) Loan is made by a person who carries on a business that consists of or includes making loans to members of the public: A 'person', as defined in subsection 136(1) of the FBTAA, includes a body corporate. As the employer is a corporation, it meets the definition of a 'person'. The business of the employer includes the making of loans to its customers within Australia. The employer is open to all members of the public. The provision of variable interest rate home loans to employees by the employer therefore meets the requirements of paragraph 17(2)(a). | Detailed Reasoning - 17(2)(b) Loan interest rate not less than a similar arm's length loan made to a member of the public in the ordinary course of the lender's business: To satisfy paragraph 17(2)(b) of the FBTAA, the proposed home loans to employees ('Employee Home Loans') must be made at an interest rate not less than a similar arm's length loan made to a member of the public ('Customer Home Loans') in the ordinary course of the employer's business in providing loans. Therefore, consideration needs to be given to a certain class of Customer Home Loans and whether the following requirements are satisfied when compared to the Employee Home Loans: (a) Customer Home Loans are a similar loan product to the proposed Employee Home Loans (b) Customer Home Loans are being made at arm's length (c) Customer Home Loans are being made to members of the public (d) The interest rate of the Employee Home Loans will not be less than the interest rate of the Customer Home Loans, and (e) Customer Home Loans are made in the ordinary course of the employer's business as a lender. (a) Customer Home Loans are a similar loan product to the proposed Employee Home Loans There is no definition of 'similar' in the FBTAA. However, paragraph 4 of Taxation Determination TD 95/18 Fringe benefits tax: can the making of a loan to an employee be an exempt benefit under subsections 17(1) or 17(2) of the FBTAA 1986 where the employee receives a reduced interest rate not available to members of the public? (TD 95/18) states: Subsection 17(2) requires a comparison of the interest rate charged on the employee loan with the rate charged on a similar arm's length loan. Whilst there is no requirement that the loans be identical, we consider that the loans should be similar in terms of both their documentation and conditions. However, we consider that the inclusion of conditions such those requiring the employee to repay or renegotiate the loan upon termination of employment or providing for a future reduction in the interest rate, will not make the loans dissimilar. The employer proposes to issue the Employee Home Loans on the same documentation and with similar terms and conditions to those offered to customers. It is considered that whilst the discount offered to the employer's employees in the Employee Home Loans will cease to apply upon the termination of employment, this does not, by itself, necessarily render the Employee Home Loans dissimilar to the Customer Home Loans. Furthermore, employees will not need to satisfy the LVR requirements that otherwise apply to members of the public for these home loan products. The Commissioner considers that, where certain conditions (including satisfaction of the applicable LVR) differ slightly and/or are waived in the provision of the Employee Home Loans in comparison to the conditions imposed on the Customer Home Loans, this would not necessarily result in a conclusion that the two loans are dissimilar. Therefore, it is considered that this requirement is satisfied. (b) Customer Home Loans are being made at arm's length 'Arm's length loan' is defined in subsection 136(1) of the FBTAA as "a loan where the parties to the loan are dealing with each other at arm's length in relation to the loan". In Taxation Ruling TR 2005/19 Income tax: scrip for scrip roll-over arrangements - application of Subdivision 124-M of the Income Tax Assessment Act 1997 - Part IVA of the Income Tax Assessment Act 1936 , it is said at the following paragraphs: 59. The question whether the parties are dealing with each other at arm's length is not decided by asking whether the parties were at arm's length to each other. Subsection 995-1(1) of the ITAA 1997 provides: Arm's length: in determining whether parties deal at arm's length, consider any connection between them and any other relevant circumstance. 60. The fact that there is no ownership connection between the parties is not determinative, on its own, of whether the parties deal with each other at arm's length. The question is whether the parties dealt with each other at arm's length; The Trustee for the Estate of the late AW Furse No. 5 Will Trust v. FC of T 91 ATC 4007 at 4014-4015; (1990) 21 ATR 1123 at 1132. This will be determined by considering the terms of the dealing and any other relevant consideration (as outlined in paragraphs 65 to 71). 61. In Granby Pty Ltd v. FC of T 95 ATC 4240 at 4243; (1995) 30 ATR 400 at 403 Lee J stated that the provision 'dealing with each other at arm's length' invited an analysis of the manner in which the parties conduct themselves in forming the transaction. The question is whether the parties behaved in the manner in which parties at arm's length would be expected to behave in conducting their affairs and the expression means, at least, that the parties have acted severally and independently in forming their bargain. 62. Further, Lee J stated (at ATC 4244; ATR 403-404) that: If the parties to the transaction are at arm's length it will follow, usually, that the parties will have dealt with each other at arm's length. That is, the separate minds and wills of the parties will be applied to the bargaining process whatever the outcome of the bargain may be. However, this will not be the case where the parties collude to achieve a particular result, or where one of the parties submits the exercise of its will to the discretion of the other. In such a case the lack of the exercise of an independent will in the formation of the transaction would indicate a lack of real bargaining. Customer Home Loans are documented in the same manner and are subject to standard default conditions. It is considered that, in the absence of any evidence to the contrary, Customer Home Loans are being made on an arms-length basis for the purposes of paragraph 17(2)(b) of the FBTAA. Accordingly, this requirement is considered to be satisfied. (c) Customer Home Loans are being made to members of the public The expression 'member of the public' is not defined in the FBTAA nor is it a technical term. The meaning of the expression is to be understood in its ordinary or everyday meaning. In Taxation Ruling TR 2000/10 Income tax: public libraries, public museums and public galleries , paragraph 18 states: To be a public library, museum, or art gallery it must be open to the public. This does not necessarily mean the whole community. It may mean a section of the community, provided it is a wide and substantial section of the community... In accordance with paragraph 81 Taxation Ruling TR 2003/5 Income tax and fringe benefits tax: public benevolent institutions (now Withdrawn), whether a group of individuals comprises a section of the public is largely a question of fact and degree and can depend on a number of factors. The number of people in the group may be relevant but this fact alone is not necessarily determinative of the matter. The members of a section of the public have a common quality that is essentially an impersonal one. As the employer offers their Customer Home Loans to any member of the public, this requirement is met. (d) The interest rate of the Employee Home Loans will not be less than the interest rate of the Customer Home Loans The variable interest rate being offered to employees will be equal to or greater than X%. As such, the relevant rate will not be lower than that of the interest rates being offered to members of the public, thus meeting this requirement. (e) Customer Home Loans are made in the ordinary course of the employer's business as a lender The employer provides services to its customers within Australia, which includes the provision of loans. Therefore, this requirement is met. | Detailed Reasoning - Conclusion: Employee Home Loans are being offered to employees at an interest rate equal to or greater than X%, which is not lower than the interest rate offered for Customer Home Loans, which are made on an arm's length basis to customers. As such, a variable interest rate home loan made to an employee under the employer's Staff Lending Policy will be an exempt loan benefit under subsection 17(2) of the FBTAA. | Detailed Reasoning - Question 1.2: Will a fixed interest rate home loan made to an employee under the employer's Staff Lending Policy constitute an exempt loan benefit under subsection 17(1) of the FBTAA? | Summary: A fixed interest rate home loan made to an employee under the employer's Staff Lending Policy will be an exempt loan benefit under subsection 17(1) of the FBTAA. | Detailed Reasoning - Detailed reasoning: Subsection 17(1) of the FBTAA provides that certain loans are to be treated as exempt benefits where: (a) a loan is made by a person who carries on a business that consists of or includes making loans to members of the public; and (b) the rate of interest payable in respect of the loan: (i) is specified in a document in existence at the time the loan is made; (ii) is not less than the rate of interest in respect of a similar arm's length loan made by the person, at or about that time, to a member of the public in the ordinary course of carrying on that business; and (iii) cannot be varied. Paragraph 17(1)(a) will be satisfied on the basis of the reasons set out in the response to Question 1.1. In particular, the employer is an institution whose services include the provision of loans to members of the public. Furthermore, Employee Home Loans will be issued on the employer's standard loan documentation with a specified rate of fixed interest. As such, the criteria at subparagraphs 17(1)(b)(i) and (iii) of the FBTAA will also be met. As the Employee Home Loans will be offered at a rate no less than Y% (being the lowest fixed rate offered on Customer Home Loans), subparagraph 17(1)(b)(ii) will be satisfied for the same reasons as those set out in the response to Question 1.1. Therefore, a fixed interest rate home loan made to an employee under the employer's Staff Lending Policy will be an exempt loan benefit under subsection 17(1) of the FBTAA. | Detailed Reasoning - Question 1.3: If the answer to Question 1.1 is 'Yes', will the inclusion of Offsetting and Redraw facilities to a fixed interest rate home loan made to an employee under the employer's Staff Lending Policy restrict the application of subsection 17(1) of the FBTAA? | Summary: The inclusion of an Offsetting facility and a Redraw facility will not restrict the application of subsection 17(1) of the FBTAA to a fixed interest rate home loan made to an employee under the employer's Staff Lending Policy. | Detailed Reasoning - Detailed reasoning: As stated in the response to Question 1.2, a fixed interest rate home loan made to an employee under the employer's Staff Lending Policy will be an exempt loan benefit under subsection 17(1) of the FBTAA. The employer proposes to issue the Employee Home Loans on the same documentation - and with similar terms and conditions - to those which are used to engage with members of the public. The only exception is that the loan rate and features, such as Offsetting and Redraw facilities offered to the employer's employees will cease to apply upon the termination of employment. As detailed in the response to Question 1.1 and in TD 95/18, this does not, by itself, necessarily render the Employee Home Loans dissimilar to the Customer Home Loans. As detailed in the response to Question 1.1, the Employee Home Loans do not have to be at an interest rate higher than all home loans products, rather all loans made by the employer are considered. Where certain conditions differ slightly and/or are waived in the provision of the Employee Home Loans in comparison to the conditions imposed on the Customer Home Loans, this would not exclusively result in a finding that the two loans are dissimilar when determining whether an employee's loan interest is at a discount for the purposes of subsection 17(2) of the FBTAA. For these reasons, it is considered that the inclusion of the loan features to Employee Home Loans (that are available on other home loan products offered to members of the public) will not restrict the application of subsection 17(2) of the FBTAA, given the home loan is made at a rate in excess of the lowest rate offered to members of the public. The following was considered in reaching this conclusion: • The employer offers all its customers the use of a loan account Offset facility on the same terms to the proposed Offset facility to be offered to employees where they elect to purchase the relevant home loan product with this included feature. As such, in accordance with paragraph 22 of Taxation Ruling 93/6 Income tax and fringe benefits tax: loan account offset arrangements , the FBT liability would only be determined by reference to a reduced interest rate (i.e., a further loan fringe benefit does not arise as a result of the offset). As stated above, the loan interest rate offered to employees will not be lower than the lowest rate offered to members of the public on Customer Home Loans. • The additional features do not include the waiver of a loan establishment fee as the employer does not charge these fees to customers. As per Westpac Banking Corporation v. Federal Commissioner of Taxation (1996) 70 FCR 52; (1996) 34 ATR 143; 96 ATC 5021, this would constitute a separate residual fringe benefit. | Detailed Reasoning - Question 1.4: If the answer to Question 1.1 is 'Yes', will a variable interest rate home loan made to an employee under the employer's Staff Lending Policy be an exempt loan benefit under subsection 17(2) of the FBTAA if it is at a rate not lower than the employer's lowest fixed rate home loan offered to members of the public? | Summary: A variable interest rate home loan made to an employee under the employer's Staff Lending Policy will be an exempt loan benefit under subsection 17(2) of the FBTAA if it is at a rate not lower than the employer's lowest fixed rate home loan offered to members of the public . | Detailed Reasoning - Detailed reasoning: The lowest fixed rate currently offered to members of the public is Y%. Based on the current economic climate, this is lower than the current variable rate offered to members of the public. Notwithstanding, it is considered that if the employer offers employees a variable interest rate home loan at a rate not lower than Y%, it will still be an exempt loan benefit under subsection 17(2) of the FBTAA. As stated in paragraph 4 of TD 95/18, there is no requirement that the loans be identical. Rather, the loans should be similar in terms of both their documentation and conditions. As provided in Example 1 of TD 95/18, a loan provided to an employee was an exempt benefit under subsection 17(2) of the FBTAA on the basis that the interest rate was equal to the fixed interest rate available to members of the public. Example 3 in TD 95/18 is in respect of an employee who has a home loan which is 'capped' for 12 months at a rate also available to members of the public after which the loan reverts to a variable loan at an interest rate which is three percent below that which is available to members of the public. In this example, the loan is exempt up until the point the rate of interest falls below the rate available to members of the public. Both of these examples demonstrate that application of the exemption under subsection 17(2) of the FBTAA is based on the principle that the employee's home loan interest rate is not at a rate below a home loan product offered regardless of whether the loan is compared to a fixed or variable home loan interest rate available to members of the public at the time. Rather, the important factors are that: • the documentation and conditions of the Employee Home Loan will still be consistent with other Customer Home Loan products being offered by the employer; • the essential character of the loan will remain, being a loan mortgaged over an owner-occupied property, and • the property mortgaged will be valued in accordance with the employer's ordinary policy and practices. As such, the variable interest rate home loan will be an exempt loan benefit under subsection 17(2) of the FBTAA if it is at a rate not lower than the employer's lowest fixed rate home loan offered to members of the public. | Detailed Reasoning - Question 1.5: Will the provision of a credit card to an employee who is provided with a fixed interest rate home loan or a variable interest rate home loan under the employer's Staff Lending Policy restrict the application of subsection 17(1) and/or subsection 17(2) of the FBTAA to the relevant loan? | Summary: The provision of a credit card to an employee who is provided with a fixed interest rate home loan or a variable interest rate home loan under the employer's Staff Lending Policy will not restrict the application of subsection 17(1) and/or subsection 17(2) of the FBTAA to the relevant loan. The provision of the credit card will not have its own FBT consequences. It will instead be treated as part of the underlying exempt loan benefit provided in respect of the relevant loan. | Detailed Reasoning - Detailed reasoning: For the reasons set out in the responses to Question 1.1 and Question 1.2, the provision of the credit card to employees who are provided with an Employee Home Loan, with an interest rate for unpaid balances equal to the underlying linked home loan rate, will not restrict the application of subsection 17(1) and/or subsection 17(2) of the FBTAA to the relevant loan. The following was considered in reaching this conclusion: • The employer carries on a business that consists of, or includes, the provision of credit card loans to members of the public. • The employer intends to provide the credit card to employees on the same documentation and with similar terms and conditions to those which are used to deal with members of the public. • The provision of the credit card with an interest rate linked to the home loan will be consistent with products being offered to the public generally. • As with the provision of the credit card to customers, the ability to be offered the credit card is directly connected to the home loan offered and is mortgaged over the corresponding property. • Whilst currently the lowest credit card rate that a member of the public has linked to their home loan is Z% on the credit card (with a Customer Home Loan), the rate charged to employees will not be lower than Y%, being the lowest rate charged for a fixed interest rate home loan offered to members of the public. | Detailed Reasoning - Question 2.1: Will the provision of insurance products to an employee constitute the provision of an in - house period residual fringe benefit under section 49 of the FBTAA? | Summary: The provision of insurance products to an employee will constitute the provision of an in-house period residual fringe benefit under section 49 of the FBTAA. | Detailed Reasoning - Detailed reasoning: A residual benefit is defined under section 45 of the FBTAA as follows: A benefit is a residual benefit for the purposes of this Act if the benefit is not a benefit by virtue of a provision of Subdivision A of Divisions 2 to 11 (inclusive). Accordingly, the provision of insurance is a residual benefit by virtue of the fact that it is not a benefit through a provision of Subdivision A of Divisions 2 to 11 of the FBTAA. An 'in-house residual fringe benefit' is defined in subsection 136(1) of the FBTAA as follows: "in-house residual fringe benefit" , in relation to an employer, means a residual fringe benefit in relation to the employer: (a) where both of the following conditions are satisfied: (i) the provider is the employer or an associate of the employer; (ii) at or about the comparison time, the provider carried on a business that consisted of or included the provision of identical or similar benefits principally to outsiders; or (b) where all of the following conditions are satisfied: (i) the provider is not the employer or an associate of the employer; (ii) the provider purchased the benefit from the employer or an associate of the employer (which employer or associate is in this definition called the seller ); (iii) at or about the comparison time, both the provider and the seller carried on a business that consisted of or included the provision of identical or similar benefits principally to outsiders; but does not include a benefit provided under a contract of investment insurance. A 'contract of investment insurance' is defined under subsection 136(1) of the FBTAA as: a contract of life assurance insuring payment of money in the event that the life insured is alive on a specified date, whether or not the contract also insures the payment of money in any other event. Furthermore, the term 'provider' is defined in subsection 136(1) as follows: in relation to a benefit, means the person who provides the benefit. 'Provide' is defined in subsection 136(1) as follows: (a) in relation to a benefit - includes allow, confer, give, grant, or perform;... Whilst the insurance products offered are third party insurance products, the employer carries on a business that consists of selling these products directly to customers. As such, the employer is considered to be the provider for the purposes of the above definition. Therefore, as the employer's business includes the provision of identical or similar insurance benefits principally to members of the public, the provision of insurance products to employees constitutes an 'in-house residual fringe benefit' pursuant to the definition of this term in subsection 136(1) of the FBTAA. Subsection 136(1) of the FBTAA defines an 'in-house period residual fringe benefit' as 'an in-house residual fringe benefit that is provided during a period'. Section 149 of the FBTAA states that a benefit 'provided during a period' means a benefit that: (a) is provided, or subsists, during a period of more than 1 day; and (b) is not deemed by a provision of the FBTAA to be provided at a particular time or on a particular day. The provision of insurance will be provided, or subsist, during a period of more than one day. Therefore, the provision of insurance products to employees under the employer's Staff Lending Policy meets the definition of an 'in-house period residual fringe benefit'. The taxable value of such a benefit is calculated in accordance with subsection 49(a) of the FBTAA, which states: Subject to this Part, the taxable value of an in-house period residual fringe benefit in relation to a year of tax is: (aa) ... (ab) ... (a) if neither paragraph (aa) nor (ab) applies and, at or about the comparison time, identical overall benefits were provided by the provider: (i) in the ordinary course of business to members of the public under an arm ' s length transaction or arm ' s length transactions; and (ii) in similar circumstances and subject to identical terms and conditions (other than as to price) as those that applied in relation to the provision of the recipient's overall benefit; an amount equal to 75% of the lowest amount paid or payable by any such member of the public in respect of the current identical benefit in relation to an identical overall benefit so provided; or (b) ... reduced by the amount of the recipient's contribution insofar as it relates to the recipient's current benefit. As such, when calculating the taxable value under subsection 49(a) of the FBTAA (the benefit will not be provided under a salary packaging arrangement), the taxable value will be calculated at an amount equal to 75% of the lowest amount paid or payable by any such member of the public in respect of the current identical benefit in relation to an identical overall benefit, reduced by the amount of the 'recipient's contribution' insofar as it relates to the employee's current benefit. | Detailed Reasoning - Question 2.2: If the answer to Question 2.1 is 'Yes', will section 62 of the FBTAA apply to reduce the aggregate taxable value of the in - house period residual fringe benefit? | Summary: Section 62 of the FBTAA applies to reduce the aggregate taxable value of the in - house period residual fringe benefit constituted by the provision of insurance products to employees. | Detailed Reasoning - Detailed reasoning: As per the response to Question 2.1, the provision of insurance products to employees constitutes an 'in-house period residual fringe benefit' pursuant to the definition of that term in subsection 136(1) of the FBTAA. Subsection 62(1) of the FBTAA applies to reduce the aggregate taxable value of all in-house fringe benefits, and states that: Where one or more in-house fringe benefits in relation to an employer in relation to a year of tax related to a particulate employee of the employer, the taxable value of that fringe benefit, or the sum of the taxable values of those fringe benefits, as the case may be, in relation to that year shall be reduced by: (a) If the taxable value of the sum of the taxable values does not exceed $1,000 - an amount equal to the taxable value or the sum of the taxable values; or (b) In any other case - $1,000. According to subsection 62(2) of the FBTAA, subsection 62(1) does not apply to an in-house fringe benefit provided under a salary packaging arrangement. As the insurance products will not be provided as part of a salary packaging arrangement, subsection 62(2) will be satisfied. Therefore, section 62 of the FBTAA can be applied to reduce the aggregate taxable value of the in-house period residual fringe benefits constituted by the provision of insurance products to the employer's employees.