Taxation Ruling

TR 1999/5W

Fringe benefits tax: employee benefit trusts and non-complying superannuation funds - meaning of 'associate' - property fringe benefits

• Please note that the PDF version is the authorised version of this withdrawal notice.
  This ruling is being reviewed as a result of a recent court/tribunal decision. Refer to Decision Impact Statement: Commissioner of Taxation v Indooroopilly Childrens Services Pty Ltd (Published 23 March 2007).
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

FOI status:

May be releasedFOI number: I 1015689

Notice of Withdrawal

Taxation Ruling TR 1999/5 is withdrawn with effect from today.

1. Taxation Ruling TR 1999/5 explained the Commissioner's view in relation to the application of fringe benefits tax to arrangements where an employee benefit trust or non-complying superannuation fund was established and a contribution was made by the employer to the trustee in respect of potential beneficiaries (being the employees of the business).

2. In TR 1999/5 the Commissioner expressed the view, amongst other things, that there was a 'fringe benefit' under the Fringe Benefits Tax Assessment Act 1986 at the time of the payment of money to the trust, notwithstanding that the payment was not in respect of a specific employee.

3. The decision of the Full Federal Court in Commissioner of Taxation v. Indooroopilly Children Services (Qld) Pty Ltd [2007] FCAFC 16 found that, for the purposes of determining whether there was a 'fringe benefit', it was necessary to identify, at the time a benefit was provided, a particular employee in respect of whose employment the benefit was provided. Whether a particular employee can be so identified and whether that gives rise to a 'fringe benefit' are questions of fact to be determined on a case by case basis.

4. However, the Commissioner's views on other matters discussed in TR 1999/5 were supported by the decision in Caelli Constructions (Vic) Pty Ltd v. FC of T (2005) 147 FCR 449, that is, that a trustee of a trust or a non-complying superannuation fund can be an 'associate' of an employee where the employee is capable of benefiting under the trust or fund, and that the payment of money by an employer to the trustee of a trust in respect of the employment of an employee is the provision of a property fringe benefit.

5. TR 1999/5 is withdrawn as the Commissioner accepts the finding of the Full Court in Indooroopilly, as set out in paragraph 3 of this Notice, and as the Court has accepted the Commissioner's other views expressed in TR 1999/5, as set out in paragraph 4 of this Notice.

6. The Commissioner will consider whether a replacement Ruling or other product is required following the withdrawal of TR 1999/5, taking into account the clear views expressed by the Federal Court and the understanding of employee benefit arrangements at this time.

Commissioner of Taxation
27 June 2007

References

ATO references:
NO 2006/20258

Related Rulings/Determinations:

TR 92/20

Subject References:
arm's length transaction
beneficial interest
contradistinction
declaration of trust
FBT associates
FBT employees
fringe benefit
in respect of employment
intangible property
non-complying superannuation funds
notional value
qualifying contribution
recipient
superannuation contributions
tangible property
trust beneficiaries
trustees

Legislative References:
FBTAA86 40
FBTAA86 43
FBTAA86 43(a)
FBTAA86 43(b)
FBTAA86 43(c)
FBTAA86 67
FBTAA86 136
FBTAA86 136(1)
FBTAA86 136(1)(hb)
FBTAA86 136(1)(j)
FBTAA86 136(1)(k)
FBTAA86 136(1)(l)
FBTAA86 136(1)(m)
FBTAA86 136(1)(n)
FBTAA86 136(1)(o)
FBTAA86 136(1)(p)
FBTAA86 148
FBTAA86 148(1)(c)
FBTAA86 148(1)(e)
FBTAA86 148(2)
FBTAA86 148(2)(c)
ITAA36 26AAB(14)
ITAA36 26AAB(14)(a)(ii)
ITAA36 26AAB(14)(a)(iv)
ITAA36 82AAE
ITAA97 8-1

Case References:
Re Manisty's Settlement Trusts
[1973] 2 All ER 1203

Re Hay's Settlement Trusts
[1981] 3 All ER 786
Moss v. Hancock
[1899] 2 QB 111
Higgs v. Holiday
(1599) Cro Eliz 746
78 ER 978
Wookey v. Pole
(1820) 4 B & Ald 1
106 ER 839
Clarke v. Shee
(1714) 1 Cowp 197
Taylor v. Plumner
(1815) 3 M & S 562
Banque Belge v. Hambrouck
[1921] 1 KB 321
Lipkin Gorman v. Karpnale Ltd
[1991] 2 AC 548
Newco Rand Co v. Martin
213 S W 2nd 504 (1948)
Sinclair v. Brougham
[1914] AC 398
Re Leslie Engineers Co Ltd (in Liq)
[1976] 1 WLR 292
Miller v. Race
(1758) 1 Burr 452
Queensland v. The Commonwealth
(1987) 162 CLR 74
Banco de Portugal v. Waterlow & Sons Ltd
[1932] AC 452

Other References:
Explanatory Memorandum: Taxation Laws Amendment Bill (No 4) 1994