If you provide accommodation for your employee rent-free or at a reduced rent, and it is their usual place of residence, it is generally a housing fringe benefit.
The housing fringe benefit rules do not apply if the employee is:
- living in an identified remote area
- living away from their usual place of residence to carry out their duties
- travelling to carry out their duties.
For the purposes of fringe benefits tax (FBT), accommodation includes exclusive or shared accommodation in a:
- house, flat or home unit
- hotel, motel, guesthouse or bunkhouse, or other living quarters
- caravan or mobile home
- ship or other floating structure.
You don't need to pay FBT if you provide housing to employees in a remote area and all of the following apply.
- For the whole of the tenancy period, the accommodation is occupied by a person who is your current employee and the usual place of their employment is in the remote area.
- It's reasonable for you to provide accommodation for employees because either
- the nature of your business is such that employees have to move frequently from one residential location to another
- there is insufficient suitable residential accommodation otherwise available at or near the place where the employees are employed
- it is customary for employers in your industry to provide free or subsidised accommodation for employees.
- You don't give the benefit to the employee under either
- a non-arm's length arrangement
- an arrangement that was entered into just to make the housing exempt.
If the housing is exempt from FBT, you don't need to take any action.
If the housing benefit is not exempt, you need to:
- work out the taxable value of the housing
- calculate how much FBT to pay
- lodge your FBT return
- pay the FBT amount
- check if you should report the fringe benefit through Single Touch Payroll (or on your employee’s payment summary).
When you calculate your FBT, you need to know the taxable value of the housing you supply. This is:
- the market rental value of the accommodation
- minus any contribution your employee makes, such as rental payments.
Reduction for temporary accommodation when an employee relocates
You can reduce the taxable value of a housing fringe benefit (possibly to nil) if you provide temporary accommodation to an employee who has to change their usual place of residence to start or continue employment with you.
This concession applies for:
- up to 21 days for temporary accommodation at the former location, if the temporary accommodation is necessary because the employee's former home is unavailable or unsuitable for occupancy
- up to 4 months for temporary accommodation at the new location, provided the employee is making a reasonable effort to acquire suitable long-term accommodation. This concession can be extended to up to 12 months in certain circumstances.
You must get an employee declaration (Temporary accommodation relating to relocation declaration) as evidence for this reduction.
For more information about housing fringe benefits, taxable value and employee relocation, see FBT guide: 10 Housing fringe benefits.Find out if FBT applies to housing accommodation you provide to employees, and how much you pay.