ATO Interpretative Decision

ATO ID 2013/35

Fringe Benefits Tax

Exempt benefits - relocation transport - cost of visa application for a non-resident employee to remain in Australia

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Issue

If an employer pays the costs of a visa application for a non-resident employee to remain in Australia, will the benefit be provided in respect of relocation transport and be exempt under section 58F of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Decision

No. As the employee is already living in Australia, the benefit is not provided in respect of the provision of transport. Therefore, the benefit is not provided in respect of relocation transport and is not an exempt benefit under section 58F of the FBTAA.

Facts

During the FBT year a non-resident employee worked for an employer in Australia for a fixed period whilst on a visa.

While in Australia, the employee is living away from their usual place of residence.

The employer would like the employee to continue working for them and consequently the employee applies for another visa in order to remain in Australia.

The employer pays the costs of that visa application.

The payment of the cost of the employee's visa application by the employer is an expense payment benefit in accordance with section 20 of the FBTAA.

Reasons for Decision

Section 58F of the FBTAA exempts from fringe benefits tax benefits 'in respect of relocation transport'.

The circumstances in which a benefit will be treated as a benefit 'in respect of relocation transport' are specified in section 143A of the FBTAA. Broadly, such benefits are transport, meals or accommodation provided to an employee who is required to live away from, or change, their usual place of residence in order to perform the duties of their employment.

Subparagraph 143A(a)(ii) of the FBTAA stipulates that relocation costs include an expense payment benefit where the recipients expenditure is in respect of the provision of transport, or meals or accommodation in connection with transport.

Transport is not defined in the FBTAA but by virtue of subsection 142A(1) of the FBTAA expenditure by an employee on accident insurance, airport or departure tax, a passport, a visa, a vaccination or any similar matter 'in connection with transport' is taken to be 'in respect of the provision of, or to consist of, transport'.

The meaning of the phrase 'in connection with' was discussed in Burswood Management Ltd v. Attorney-General (1990) 23 FCR 144. In a joint decision the court said:    


The words 'in connection with' are words of wide import; and the meaning to be attributed to them depends on their context and the purpose of the statute in which they appear.

The Explanatory Memorandum to the Tax Laws Amendment (Fringe Benefits and Substantiation) Bill 1987 ('the EM') which introduced section 143A of the FBTAA discusses the intended meaning of 'benefit in respect of relocation transport':    


The circumstances in which a benefit will be treated as a 'benefit in respect of relocation transport' are specified in proposed section 143A. Broadly, such a benefit is one that is provided to an employee who moves from one locality to another in the course of employment or in order to commence new employment where the benefit meets travel costs (i.e., transport costs and accommodation and meals en route) incurred by the employee (or a family member) for the purpose of taking up residence in the locality of the new work place.

The EM makes it clear that a benefit in respect of relocation transport is intended to cover travel costs incurred for the purpose of an employee taking up residence in the locality of a new work place. Therefore, the words 'in connection with' in subsection 142A(1) of the FBTAA should be read such that only visa application costs that are incurred for the purpose of an employee taking up residence in the locality of a new work place will be 'in connection with transport'.

The employee applied for a visa in order to remain in Australia. At the time, the employee was already living in Australia. The visa application costs were not incurred for the purpose of the employee taking up residence in the locality of a new work place. Therefore, the costs are not 'in connection with transport' for the purposes of subsection 142A(1) of the FBTAA or 'in respect of the provision of transport' for the purposes of subparagraph 143A(a)(ii) of the FBTAA.

Accordingly, the benefit is not provided 'in respect of relocation transport' and therefore is not an exempt benefit under section 58F of the FBTAA.

Date of decision:  5 June 2013

Year of income:  Year ended 31 March 2014

Legislative References:
Fringe Benefits Tax Assessment Act 1986
   section 58F
   subsection 142A(1)
   section 143A
   subparagraph 143A(a)(ii)

Case References:
Burswood Management Ltd v. Attorney-General(Cth)
   (1990) 23 FCR 144

Other References:
Explanatory Memorandum to the Tax Laws Amendment (Fringe Benefits and Substantiation) Bill 1987

Keywords
Fringe Benefits Tax
Exempt Benefits
FBT Relocation Transport

Siebel/TDMS Reference Number:  1-3YCRM5P; 1-78Y9Y58; 1-DIMUZ1C

Business Line:  Private Groups and High Wealth Individuals

Date of publication:  28 June 2013
Date reviewed:  16 January 2018

ISSN: 1445-2782