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Edited version of private ruling
Authorisation Number: 1011630989000
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Ruling
Subject: Living away from home allowance
Question 1
Is the personal loading paid to you considered a living away from home allowance fringe benefit in accordance with Subsection 30(1) of the Fringe Benefits Tax Assessment Act 1986?
Answer
No.
Question 2
Are you in receipt of a living away from home allowance?
Answer
No.
Question 3
Have you entered into an effective salary sacrifice arrangement?
Answer
No.
This ruling applies for the following periods
1 July 2008 to 30 June 2009
1 July 2009 to 30 June 2010
The scheme commenced on
1 July 2008
Relevant facts
The arrangement that is the subject of the private ruling is described below. This description is based on the following documents. These documents form part of and are to be read with this description. The relevant documents are:
· the application for private ruling,
· supporting document for the private ruling request in respect of salary sacrifice arrangement and living away from home allowance.
You were appointed to fulfil a position for four years.
Your remuneration package was determined by a Tribunal.
You do not have a written salary sacrifice agreement with your employer.
There is no evidence of an oral salary sacrifice agreement with your employer.
You were entitled to a personal loading amount per annum.
No living away from home allowance has been identified in your remuneration package.
Reasons for decision
Personal loading and living-away-from-home allowance
Subsection 30(1) of Fringe Benefits Tax Assessment Act 1986 (FBTAA) states;
Where:
(a) at a particular time, in respect of the employment of an employee of an employer, the employer pays an allowance to the employee; and
(b) it would be concluded that the whole or a part of the allowance is in the nature of compensation to the employee for:
(i) additional expenses (not being deductible expenses) incurred by the employee during a period; or
(ii) additional expenses (not being deductible expenses) incurred by the employee, and other additional disadvantages to which the employee is subject, during a period;
by reason that the employee is required to live away from his or her usual place of residence in order to perform the duties of that employment;
the payment of the whole, or of the part, as the case may be, of the allowance constitutes a benefit provided by the employer to the employee at that time.
In your case a Tribunal set your remuneration and no element of compensation for additional expenses incurred by reason of you being required to live away from you usual place of residence has been identified. Further, the confirmation of your eligibility for a package of assistance to meet the additional costs incurred as a result of your relocation specified what allowances may be included for your relocation. An allowance for living away from home was not included in those listed as assistance to meet additional costs.
Therefore, there is no indication that the personal loading entitlement was intended to fulfil (i) or (ii) above and as an allowance has not been specified for living away from home the requirements of subsection 30(1) of the FBTAA have not been met. That is, you were not in receipt of a living away from home allowance.
Effective salary sacrifice arrangement
The Commissioner's view on the taxation implications of salary sacrifice arrangements (SSA) is discussed in Taxation Ruling TR 2001/10.
The views set out in TR 2001/10 apply both to employers and employees whose personal service relationship is governed by appointments, statute and award conditions and to those whose personal service relationship is governed by individual contracts, collective contracts, enterprise workplace agreements or similar agreements or a combination of these.
A salary sacrifice arrangement is an arrangement between an employer and an employee whereby the employee agrees to forgo part of their future remuneration entitlement in return for a benefit of a similar value. The consequence of such an arrangement is that the employee is assessed on the reduced amount of the salary actually received and the employer is liable for any fringe benefits tax payable on the benefit provided.
TR 2001/10 states that an effective SSA details the amount of income to be sacrificed, and must be entered into before the employee becomes entitled to be paid.
Paragraph 19 of TR 2001/10 states:
' Salary sacrifice arrangement' - in this Ruling, the term salary sacrifice arrangement means an arrangement under which an employee agrees to forego part of his or her total remuneration, that he or she would otherwise expect to receive as salary or wages, in return for the employer or someone associated with the employer providing benefits of a similar value. The main assumption made by the parties is that the employee is then taxed under the income tax laws only on the reduced salary or wages and that the employer is liable to pay FBT, if any, on the benefits provided.
Paragraph 21 of TR 2001/10 states:
' Effective SSA' - an effective SSA involves the employee agreeing to receive part of his or her total amount of remuneration as benefits before the employee has earned the entitlement to receive that amount as salary or wages.
In your case there is no evidence of any salary sacrifice arrangement being made with your employer. Therefore an effective salary sacrifice arrangement has not been seen to have been made.
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