ATO Interpretative Decision
ATO ID 2001/253
Fringe Benefits Tax
Fringe benefits tax: waiver of a levy payable by a unit owner/employeeFOI status: may be released
This version is no longer current. Please follow this link to view the current version. |
-
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Whether the waiver of a levy payable by the owner of a unit in a strata titled complex is a fringe benefit in a situation where the owner is employed as a caretaker by the corporate body.
Decision
Yes. The waiving of the levy will be either a debt waiver fringe benefit under section 14 or a residual fringe benefit under section 45 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA).
Facts
The owner of one of the units in a strata titled complex of residential units has been employed by the corporate body as its part-time caretaker.
The caretaker is paid a wage by the corporate body.
The operating expenses of the body corporate are met by periodic levies collected from unit owners.
The body corporate has decided not to collect these levies from the owner who is the part-time caretaker.
The minutes of a meeting of the corporate body record that as an employee of the Corporate Body, the caretaker enjoyed privileges that were not given to other unit owners. Specific mention was made to the waiving of levies applicable to the duration of employment of the caretaker.
Reasons for Decision
The definition of a fringe benefit contained within subsection 136(1) of the FBTAA provides that a fringe benefit will be provided when a benefit is provided to an employee by an employer in respect of the employment of the employee, unless the benefit is one of the benefits specifically exempted from being a fringe benefit.
The waiving of the levy is a benefit provided under an arrangement for or in relation to the performance of work and is either a debt waver or a residual fringe benefit.
The caretaker is an employee and the Corporate Body is the employer.
The meaning of 'in respect of employment' was considered by the Full Federal Court in J & G Knowles v. Federal Commissioner of Taxation (2000) 96 FCR 402; 2000 ATC 4151; (2000) 45 ATR 1101. The Full Federal Court held that it is not sufficient for the purposes of the FBTAA to conclude that there was a causal connection between the benefit and the employment. It must be established that there was a sufficient and material connection or relationship between the benefit and the employment.
There is sufficient and material connection between the non-payment of the levies and the employment duties of the caretaker. The caretaker would not have received the benefit had he not been an employee and the Minutes confirmed that the levies were only waived because the caretaker was an employee of the Body Corporate. The levies were only waived during the period of the caretaker's employment.
The waiving of levies is not a specifically exempt fringe benefit.
Date of decision: 22 May 2001
Legislative References:
Fringe Benefits Tax Assessment Act 1986
Section 14
Section 45
Section 136(1)
Keywords
Fringe Benefits
Debt Waiver Fringe Benefits
Residual Fringe Benefits
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 22 May 2001 | Original statement |
| 22 April 2016 | Updated statement |