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Answer :
Final Answer:
Gordon is not required to include the interest-free loan of $500,000 as assessable income for tax purposes.
Explanation:
The loan provided by QP Pty Ltd to Gordon is considered a ""fringe benefit"" under Australian tax law. Fringe benefits are generally non-cash benefits provided to employees by their employers in addition to their salary or wages. In this case, the interest-free loan falls under the category of a fringe benefit.
Under the Fringe Benefits Tax (FBT) rules in Australia, certain fringe benefits are exempt from tax, including interest-free loans provided by employers to employees. This exemption is available as long as the loan is provided on commercial terms, which includes an interest rate at or above the benchmark interest rate set by the Australian Taxation Office (ATO).
Since Gordon used the loan to pay off a previous loan from XYZ Bank that was incurring interest at a rate of 7% per annum, the loan from QP Pty Ltd can be considered as being provided on commercial terms, even though it is interest-free. Therefore, Gordon is not required to include the $500,000 interest-free loan as assessable income for tax purposes.
Learn more about Fringe Benefits Tax (FBT)
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