ATO Interpretative Decision
ATO ID 2003/1030 (Withdrawn)
Fringe Benefits Tax
FBT exemption: payments to approved worker entitlement fundsFOI status: may be released
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This ATO ID is withdrawn because the position stated in the ATO ID is included Class Ruling CR 2004/22.This document incorporates revisions made since original publication.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Is the employer, who makes a contribution to an approved worker entitlement fund to meet its obligation to make leave payments for its employees, providing an exempt fringe benefit under section 58PA of the Fringe Benefits Tax Assessment Act 1986 (FBTAA), when it has a discretion as to whether or not to use an approved worker entitlement fund to meet this obligation?
Decision
No. The employer who makes a contribution to an approved worker entitlement fund to meet its obligation to make leave payments for its employees, is not providing an exempt fringe benefit under section 58PA of the FBTAA when it has a discretion as to whether or not to use an approved worker entitlement fund to meet its obligation to make the leave payments.
Facts
The relevant industrial instrument governing worker entitlements imposes an obligation on the employer to make leave payments for its employees.
The relevant instrument allows the employer discretion as to whether or not to use an approved worker entitlement fund to meet this obligation. The employer makes a contribution to an approved worker entitlement fund to meet its obligation to make the leave payment.
Reasons for Decision
Under section 58PA of the FBTAA provides that a contribution by an employer is an exempt fringe benefit if:
- (a)
- the employer makes a contribution to an approved worker entitlement fund; and
- (b)
- the employer is required to make the contribution under an industrial instrument; and
- (c)
- the contribution is either:
- (i)
- required for the purposes of ensuring that an obligation under the industrial instrument to make leave payments (including payments in lieu of leave) or payments when an employee ceases employment is met; or
- (ii)
- for the reasonable administrative costs of the fund.
Section 58PA of the FBTAA will be satisfied if the contribution to an approved worker entitlement fund is 'required' under the relevant industrial instrument.
In this case, although the employer has an obligation to make leave payments to the employee, the use of an approved worker entitlement fund to meet this obligation is discretionary. The employer is not required to make the contribution to the approved worker entitlement fund under the relevant industrial agreement.
Therefore, the requirements of section 58PA of the FBTAA are not satisfied and the employer is not providing an exempt benefit under section 58PA of the FBTAA when it has discretion as to whether or not to use an approved worker entitlement fund to meet its obligation to make leave payments.
Date of decision: 31 October 2003Year of income: Year ended 30 June 2004
Legislative References:
Fringe Benefits Tax Assessment Act 1986
section 58PA
Keywords
FBT employers
Fringe benefits tax
ISSN: 1445-2782
| Date: | Version: | |
| 31 October 2003 | Original statement | |
| You are here | 17 March 2004 | Archived |