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  • FBT States and Territories Industry Partnership minutes 20 September 2018

    Disclaimer

    The FBT States and Territories Industry Partnership (STIP) meeting agendas, minutes and related papers are not binding on the ATO or any of the other bodies referred to in these papers. While every effort is made to accurately record the views expressed, the wording necessarily represents a summary of statements of general position only, and care should be taken in interpreting those statements. These papers reflect the position at the date of release (unless otherwise noted) and readers should note that the position on any issue may subsequently change.

    1. Opening

    Welcome and introduction.

    2. Confirmation of the minutes

    Minutes of the previous meeting were confirmed without changes. Refer to FBT States and Territories Industry Partnership minutes of 20 March 2018.

    3. Action items

    Action items from 21 March 2018 FBT STIP meeting

    Action item

    1

    Description

    Provide update regarding the progress of a miscellaneous tax bill to update section 135T of the Fringe Benefits Tax Assessment Act 1986 (FBTAA). The proposed amendments are to reflect changes to the legislation in various States and Territories.

    Update

    Members were advised by email that Treasury Laws Amendment (2018 Measures No. 4) Bill 2018External Link has been introduced to Parliament and to refer to paragraphs 8.56 to 8.59 of the Explanatory MemorandumExternal Link for an explanation as to the proposed amendments.

    Next steps

    Item completed

     

    Action item

    2

    Description

    Provide update on progress of TR 2017/D6

    Update

    Members were advised that following feedback received during the consultation on TR 2017/D6, we have revisited our approach to a number of aspects of the draft Ruling.

    A revised version of the ruling was presented to the Public Advice and Guidance Panel on 19th September 2018. Members were advised to refer to the Advice under development program for further updates ([3756] Deduction for work related travel expenses)

    Next steps

    Item completed

     

    Action item

    3

    Description

    Provide an update as to the finalisation of the review of TR 96/26.

    Update

    Members were advised that we have progressed our rewrite of TR 96/26. We have also substantially redrafted Chapter 16 of Fringe benefits tax - a guide for employers (Chapter 16) to complement the draft update.

    Further updates will be provided on the Advice under development program ([3863] Fringe benefits tax – car parking fringe benefits).

    Next steps

    Provide members with details as to how to participate in consultation in relation to the draft update to TR 96/26 and draft update to Chapter 16.

    4. ATO updates

    FBT Quarterly Bulletins Issue 9 and Issue 10 were provided as attachments to the agenda. The bulletins outlined updates for March-August 2018 on FBT related advice and guidance products, on legislation and on FBT administrative matters. No questions were raised in relation to the bulletins.

    Action item

    1

    Description

    Technical updates focusing on key changes in relation to FBT.

    Responsibility

    ATO to provide verbal briefings on matters identified by members.

    Members to outline what key matters they would like the ATO to address as part of the update.

    Due date

    Next meeting

    5. Issues raised by the states and territories

    5.1 Car related exemptions

    Issue

    How do the guidelines in PCG 2018/3 apply (with respect to the total private use of the vehicle not exceeding 1000km in a tax year) where the vehicle provided is available to more than one employee?

    ATO Response

    Employers will need to be able to satisfy themselves that they have met the requirements of the PCG 2018/3 in order to rely on the compliance approach.

    Employers may lodge a request for a private ruling on the application of sections 8 and 47 of the FBTAA where they require a greater level of certainty in relation to the application of the law to their arrangements, such as where the vehicle is available to more than one employee.

    Action item

    2

    Description

    Availiability of pool vehicles for private use

    Responsibility

    Members to provide details as to the circumstances (including how often) in which exempt vehicles are part of a genuine car pool arrangement and are available for private use.

    Due date

    Next meeting

    5.2 Guidance on circumstances in which car parking benefits will arise in relation to a pool car

    Issue

    At the April 2016 FBT States and Territories Industry Partnership (STIP) meeting, a number of car parking fringe benefit submissions were raised (refer to agenda item 5.4). One of the submissions discussed the circumstances in which a car parking benefit will arise in relation to a pool car.

    We understand TR 96/26 is currently under review to reflect contemporary commercial car parking arrangements.

    Some departments would like to confirm if guidance on the application of the legislation to a car park used by a pool car is within scope of the current ruling review and/or if the ATO intends to issue further public guidance on this. 

    ATO Response

    The submission received on pooled cars is being considered as part of our review of TR 96/26 (as outlined in response to agenda item 5.4 in the STIP minutes of meeting held on 28 April 2016). See update to Action item 3 above for details on the progress of the draft update to TR 96/26.

    Whether a car parking fringe benefit arises is a question of fact based on the individual circumstances surrounding the provision of the benefit. To the extent that members have a particular car pool parking scenario that they are unsure as to the FBT consequences, they are encouraged to engage with us early and seek advice.

    5.3 Living Away From Home Allowance vs Travel Allowance

    Issue

    Is the allowance paid to the employee a LAFHA under section 30 of the FBTAA, or a travel allowance?

    Background

    Employee accepted a position with the Northern Territory Government (NTG) while working in Uluru with his previous employer. This position with NTG will be based in Alice Springs.

    While working with the previous employer, the employee was residing in ‘employer provided’ accommodation in Uluru.

    Upon commencement of employment with the NTG, he moved out of the ‘employer provided’ accommodation.

    The employee’s first requirement as an NTG employee was to immediately attend training in Darwin for a continuous period of 3 months, for eventual return to Alice Springs.

    The employee travelled directly to Alice Springs, placed his personal belongings into storage in Alice Springs and then flew to Darwin for training.

    NTG organised flights and accommodation for the employee at the training course location in Darwin. The employee was paid an allowance to cover meals and incidentals during the 3 month training period. The amount of the allowance was within the ATO’s reasonable amounts for domestic travel expenses per TD 2017/19.

    ATO response

    This scenario comprises a very unique set of circumstances. The ATO will work directly with the STIP Member in determining the FBT implications.

    The following general information relates to determining if a Living Away From Home Allowance has been provided.

    Is an allowance paid to an employee a LAFHA under section 30 of the FBTAA 1986?

    Section 30 of the FBTAA sets out the circumstances in which an allowance paid to an employee will be a LAFHA benefit.

    Subsection 30(1) of the FBTAA states:

    Where:
    at a particular time, in respect of the employment of an employee of an employer, the employer pays an allowance to the employee; and
    it would be concluded that the whole or a part of the allowance is in the nature of compensation to the employee for:
    additional expenses (not being deductible expenses) incurred by the employee during a period; or
    additional expenses (not being deductible expenses) incurred by the employee, and other additional disadvantages to which the employee is subject, during a period;
    by reason that the duties of that employment require the employee to live away from his or her normal residence;
    the payment of the whole, or of the part, as the case may be, of the allowance constitutes a benefit provided by the employer to the employee at that time.

    Accordingly, in applying subsection 30(1) of the FBTAA an allowance will be LAFHA if:

    • the allowance is paid in compensation for additional expenses incurred by an employee during a period by reason that the duties of employment require the employee to live away from his or her normal place of residence, and
    • the additional expenses are not deductible expenses.

    Whether an employee is living away from home depends on the facts of each case. There are a number of relevant factors to be considered when determining if an employee is living away from home. These include:

    • the time spent away from home
    • whether the employee has a usual place of residence at a previous location
    • the nature of the accommodation, and
    • whether the employee is, or can be, accompanied by family or visited by family or friends.

    Time spent working away from home

    A general principle is that the longer an employee spends working away from home, the more likely that the employee is living away from home.

    Whether the employee has a usual place of residence at a previous location

    The Commissioner considers an employee is only living away from home where it is reasonable to conclude that they intend to return to their previous location after work at the new location ceases. An employee who has permanently left their previous location is not living away from home but has relocated.

    Indicators that an employee has a usual place of residence at a previous location include the employee’s ownership or possession of premises at that location and occupation of the premises by members of the employee’s family.

    The nature of the accommodation

    Where an employee works away from home for a considerable period and, for that period, stays in settled accommodation (such as a house, unit or apartment), this would support the view that they are living away from home.

    By contrast, the rudimentary nature of accommodation available to an employee may indicate that they are not living away from home, even where they work at a particular location over an extended period.

    5.4 Interaction between LAFHA and exempt residual benefits

    Issue

    Does electing to use exempt residual benefits for accommodation and travel prevent an employer claiming an exempt food component pursuant to a living away from home food fringe benefit?

    Background

    A medical employee has been offered a role in a remote region, working a regular four-day week (Monday to Thursday) and having Friday, Saturday and Sunday off each week. The employee returns to her family, who all reside in the family home, on her days off.

    The cost of travel is paid for by the employer each way, and it is not reasonable for the employee to commute on a daily basis.

    Accommodation is provided in the remote location.

    Industry view/suggested treatment

    Where an expense payment fringe benefit or a property fringe benefit, meet the criteria as defined in section 136 of the FBTAA “living-away-from-home food fringe benefit” are paid, and meet the criteria for a reduction of taxable value in section 63 of the FBTAA, the reduction in taxable value can be applied in conjunction with the exempt residual benefits in sections 47(5) and 47(7) of the FBTAA.

    Technical references

    Section 47(5) FBTAA

    Section 47(7) FBTAA

    Section 136 FBTAA

    ATO View

    Summary

    When considering LAFHA, we need to approach from deductibility angle first.

    In the above scenario, three different benefits are provided to the employee when she is living away from home to undertake her employment duties.

    These benefits are transport, accommodation and food.

    Once the benefits are identified, the employer must determine how the benefits are treated for fringe benefits tax purposes:

    • What type of fringe benefit has been provided?
    • Do any specific exemptions apply?
    • If no exemptions apply, what is the taxable value of the benefit; and
    • Are any reductions available to reduce the taxable value of the benefit?

    Therefore, a reduction in the taxable value of a benefit is not applied ‘in conjunction’ with any relevant exemptions. Rather, the taxable value of each fringe benefit must be calculated based on the valuation rules for the relevant benefit.

    Further Guidance: section 47(7) of the FBTAA

    Fly-in, fly-out transport is exempt from FBT under section 47(7) of the FBTAA where all of the following apply:

    • an employee's usual place of employment is at a remote location in Australia or overseas, or on oil rigs or other installations at sea;
    • employees are provided with accommodation at or near the worksite on working days;
    • on a regular basis the employee works for a number of days followed by a number of days off, returning to their usual place of residence on their days off;
    • you provide the employee with FIFO transport between their usual place of residence and their place of employment; and
    • the FIFO transport provided is a residual benefit
    • having regard to the location of the two places, it would be unreasonable to expect the employee to travel to and from work on a daily basis.

    Chapter 20 of the FBT: A Guide for Employers was recently updated to be clear the transport benefit provided must be a residual benefit for the section 47(7) exemption to apply.

    If the transport provided is a property or expense payment fringe benefit the section 47(7) exemption cannot apply.

    6. General business

    The next meeting will be held on 21 March 2019.

    Action item

    3

    Description

    Arrangements for next meeting - consider alternative online platforms.

    Responsibility

    ATO to discuss with members.

    Due date

    Prior to next meeting

    Meeting details

    Venue:

    Teleconference

    Start:

    1.00pm

    Finish:

    3.00pm

    Chair:

    Roberta Odorizzi (03) 5227 1651

    Secretariat:

    Roberta Odorizzi (03) 5227 1651

    Attendees

    Alshlea Perry

    CTH

    Alice Walker

    CTH

    Robert Enright

    ACT

    Joan Cram

    NSW

    Harold Glenwright

    NT

    Michael Kwong

    NT

    Joanne Staples

    NT

    Liza Gordon

    QLD

    Daniel Fielding

    QLD

    Justyna Carlier

    SA

    Rachel Johnston

    TAS

    Jeremy Ooi

    ATO

    Amber Ibbott

    ATO

    Roberta Odorizzi

    ATO

    Faith Hughes

    ATO

    Michelle Maffia

    ATO

    Michael Sullivan

    ATO

    Christopher Schoffer

    ATO

    Apologies

    Christine Havans

    CTH

    Desley Croker

    ACT

    Tracey Scott

    SA

    Peter Stibbard

    VIC

    Mike Hogan

    VIC

    Anthony Smith

    WA

    John Watts

    WA

    Christine Crasto-Carvalho

    WA

    Henriette Prego

    NSW

    Anna Longley

    ATO

    Andrea Ross

    ATO

      Last modified: 16 Nov 2018QC 57384