• 10.8 Exempt housing benefits

    Remote area housing benefits

    A remote area housing benefit is an exempt benefit under section 58ZC of the Fringe Benefits Tax Assessment Act 1986.

    A housing benefit qualifies as a remote area housing benefit where:

    a

    For the whole of the tenancy period, the unit of accommodation is in a remote area (that is, it is not located in or adjacent to an eligible urban area).

    b

    For the whole of the tenancy period, the accommodation is occupied by a person who is your current employee, and the usual place of employment of the employee is in the remote area.

    c

    It would be concluded that it must be necessary for you to provide accommodation for employees or to arrange to provide such accommodation because:

    • the nature of your business is such that employees are liable to move frequently from one residential location to another
    • there is insufficient suitable residential accommodation otherwise available at or near the place or places where the employees are employed, or
    • it is customary for employers in that industry to provide free or subsidised accommodation for employees.

     

    d

    The benefit was not provided to the employee under either:

    • a non-arm's length arrangement,
    • an arrangement that was entered into by any of the parties for the purpose, or partial purpose, to obtain the concession.

     

     

    For most employers, accommodation is in a remote area if it is not in or near an urban centre. Accommodation is classified as being near or adjacent to an eligible urban area and therefore not remote where it is situated is either:

    • less than 40 kilometres from an eligible urban area with a census population of 14,000 to less than 130,000
    • less than 100 kilometres from an eligible urban area with a census population of 130,000 or more.

    If the accommodation is in zone A or B (for income tax purposes), to be remote it must be located:

    • at least 40 kilometres from an eligible urban area with a census population of 28,000 to less than 130,000, and
    • at least 100 kilometres from an eligible urban area with a census population of 130,000 or more.

    The population figures are based on the 1981 Census.

    Where the shortest practical surface route includes water

    From 1 April 2007, when determining whether a location is remote and the shortest practical surface route includes a route by water, the distance between these locations is worked out using the following formula:

    [total kilometres of the surface route that are by water x 2] + total kilometres of the surface route that are by land.

    Example

    Wong Island is 80 kilometres, by the shortest practical surface route, from the centre point of an inland eligible urban area with a population of 140,000. The shortest practical surface route to the island involves 40 kilometres of travel by road and 40 kilometres of travel by sea.

    Wong Island is also situated 45 kilometres, by the shortest practical surface route, from the centre point of an eligible urban area with a population of 20,000.

    Prior to 1 April 2007, Wong Island would not have been considered 'remote' for FBT purposes as it is less than 100 kilometres away from an eligible urban area of at least 130,000. However, from 1 April 2007, Wong Island will be 'remote' as it is 120 kilometres - that is, (40 kilometres by water x 2) + 40 kilometres by land - from an eligible urban area by the shortest practical surface route.

    End of example

    Where the circumstances warrant it, the Commissioner has a discretion to treat a person who resides or works in an area adjacent to an eligible urban area as residing or working outside that area if people who live or work near that person are outside the area.

    Where free water is provided to an employee in accordance with a residential tenancy agreement between you and the employee, the water will form part of the housing benefit on which the remote area housing fringe benefit is based. Therefore, the provision of water in this instance is also exempt from FBT.

    Extension of the remote area housing exemption for some regional employers

    An extended exemption applies under subsection 140(1A) of the Fringe Benefits Tax Assessment Act 1986 to housing benefits provided for employees of:

    • a public hospital
    • a government body where the duties of the employee are exclusively performed in, or in connection with, a public hospital or a non-profit hospital
    • a hospital carried on by a non-profit society or a non-profit association
    • a charitable institution
    • a public ambulance service
    • a police service.

    For these employers, regardless of whether or not they are located in a zone A or B area (for income tax purposes), an employee's housing will no longer be considered adjacent to an eligible urban area (and will therefore be remote), where it is situated less than 40 kilometres via the shortest practical surface route from the centre point of an eligible urban area of less than 130,000 people.

    For eligible urban areas of 130,000 or more, an area adjacent to an eligible urban area (and therefore not remote) will remain as being within 100 kilometres via the shortest practical surface route from that eligible urban area's centre point.

    Attention

    The extended definition of remote area housing for some regional employers only applies to the remote area residential fuel reduction. It does not apply to the other remote area reductions explained in section 19.2 of Reductions in fringe benefit taxable value .

    End of attention
      Last modified: 15 Oct 2013QC 17824