ATO Interpretative Decision
ATO ID 2003/160
Fringe Benefits Tax
Remote area housing: reduction of taxable value - residential property and employee's purchase considerationFOI status: may be released
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This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Does the employee's expenditure incurred in purchasing a house in a remote area satisfy the paragraph 142(2C)(c) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) requirement of being 'recipients expenditure that is incurred wholly to enable the employee to acquire an estate or interest in land on which there is a dwelling'?
Decision
Yes, because the employee's expenditure is wholly for that purpose.
Facts
After commencing employment with the employer, the employee acquires land on which there is a house (the property). The property is located in a remote area. The property is acquired under a contract of sale.
The employer reimburses the employee all (or part) of the purchase price of the property. The reimbursement is made with reference to the purchase price of the property, being the expenditure incurred by the employee.
The reimbursement is an 'expense payment fringe benefit' as defined in subsection 136(1) of the FBTAA.
Reasons for Decision
Under subsection 60(4) of the FBTAA, an employer is entitled to apply a 50% reduction to the taxable value of certain 'expense payment fringe benefits' when the 'recipients expenditure is in respect of remote area residential property'.
Broadly, the subsection discounts by 50% the taxable value of a fringe benefit relating to the provision of assistance to enable an employee to acquire a 'unit of remote area accommodation' (typically, a house in a remote area of Australia).
Subsection 142(2C) of the FBTAA provides rules for determining eligibility for this 50% reduction.
Subsection 142(2C) of the FBTAA sets out the criteria of when 'the recipients expenditure is in respect of remote area residential property'. Paragraph 142(2C)(c) of the FBTAA includes the requirement that the 'recipients expenditure' be incurred wholly 'to enable the employee to acquire an estate or interest in land on which there is a dwelling'.
The recipient of the 'expense payment fringe benefit' is an employee of the employer.
'Recipients expenditure', as defined in section 136(1) of the FBTAA means, in relation to an 'expense payment benefit', the expenditure incurred by the recipient as described in paragraph 20(b) of the FBTAA. The 'recipients expenditure' is the employee's purchase price under the contract of sale.
The Macquarie Dictionary Online defines the term 'wholly' as meaning:
1. entirely; totally; altogether; quite.
2. to the whole amount, extent, etc.
3. so as to comprise or involve all.
The 'recipients expenditure', being the purchase price under the contract of sale, is considered to be expenditure incurred wholly or entirely for the purpose of acquiring the property.
Accordingly, paragraph 142(2C)(c)of the FBTAA is satisfied.
Subsection 142(2C) of the FBTAA contains other requirements. Subparagraph 142(2C)(g)(ii) requires that, at the time the 'recipients expenditure' was incurred, which is the date the contract of sale was executed, the employee was a current employee and the usual place of employment was in a remote area.
Note: Refer also to ATO Interpretative Decision ATO ID 2003/158 where an employee's residential loan repayments were considered not to be qualifying expenditure within paragraph 142(2C)(c) of the FBTAA.
Amendment History
| Date of Amendment | Part | Comment |
|---|---|---|
| 6 April 2018 | Issue, Reason for Decision | Minor punctuation and grammar amendments |
Year of income: Year ended 31 March 2002
Legislative References:
Fringe Benefits Tax Assessment Act 1986
paragraph 20(b)
subsection 60(4)
subsection 136(1)
subsection 142(2C)
paragraph 142(2C)(c)
subparagraph 142(2C)(g)(ii)
ATO ID 2003/157
ATO ID 2003/158
ATO ID 2003/159
Other References:
Macquarie Dictionary Online
Keywords
Expense payment fringe benefits
FBT expense payment
FBT remote area housing
FBT taxable value
Fringe benefits
Fringe benefits tax
Reduction of taxable value
Date reviewed: 12 March 2018
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 14 January 2003 | Original statement |
| 24 July 2026 | Updated statement |