Commonwealth Numbered Acts

FRINGE BENEFITS TAX ASSESSMENT ACT 1986 No. 39 of 1986 - SECT 42

42. (1) Subject to this Part, the taxable value of an in-house property
fringe benefit in relation to an employer in relation to a year of tax is-

   (a)  where the recipients property was manufactured, produced, processed or
        treated by the provider-

        (i)    if identical property that was manufactured, produced,
               processed or treated, as the case may be, by the provider was,
               at or about the provision time, sold by the provider in the
               ordinary course of business to purchasers being manufacturers,
               wholesalers or retailers, an amount equal to-

                (A)  if any of that identical property was, at or about the
                     provision time, sold by the provider under an arm's
                     length transaction or arm's length transactions-the
                     lowest price at which it was sold under such a
                     transaction; or

                (B)  if sub-sub-paragraph (a) does not apply-the lowest price
                     at which any of that identical property could reasonably
                     be expected to have been sold by the provider at or about
                     the provision time under an arm's length transaction,
increased, where sales tax was not, or would not have been, payable, by the
provider in respect of the sale concerned, by the amount of any sales tax
payable by the provider in respect of the provision of the recipient's
property to the recipient;

        (ii)   where sub-paragraph (i) does not apply but identical property
               that was manufactured, produced, processed or treated, as the
               case may be, by the provider was, at or about the
               provision time, sold by the provider-

                (A)  in the ordinary course of business to members of the
                     public under an arm's length transaction or arm's length
                     transactions; and

                (B)  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
                     recipients property to the recipient,
an amount equal to 75% of the lowest price at which that property was so sold
to a member of the public; or

        (iii)  in any other case-an amount equal to 75% of the notional value
               of the recipients property at the provision time;

   (b)  where paragraph (a) does not apply and the property was acquired by
        the provider-an amount equal to the lesser of-

        (i)    the arm's length price in respect of the acquisition of the
               recipients property by the provider increased, in a case where
               sales tax was not payable by the person from whom the provider
               acquired the property in respect of the disposal of the
               property to the provider, by the amount of any sales tax
               payable in respect of the provision of the recipients property
               to the recipient; or

        (ii)   the notional value of the recipients property at the provision
               time; or

   (c)  in any other case-an amount equal to 75% of the notional value of the
        recipients property at the provision time, reduced by the amount of
        the recipients contribution.
(2) In sub-section (1), "arm's length price", in respect of the acquisition of
the recipients property by the provider, means-

   (a)  if the recipients property was acquired by the provider in the
        ordinary course of business under an arm's length transaction-the
        cost price of the recipients property to the provider; or

   (b)  in any other case-the amount that the provider could reasonably be
        expected to have been required to pay to acquire the
        recipients property under an arm's length transaction in the ordinary
        course of business.