Edited version of private ruling

Authorisation Number: 1011643483557

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Ruling

Subject: Fringe benefits tax: Remote area housing benefits.

Question 1

Pursuant to the Fringe Benefits Tax Assessment Act 1986 (FBTAA), does the employer situated at X qualify for the remote area housing benefit?

Answer

Yes.

This ruling applies for the following period:

1 July 2009 - 30 June 2010.

The scheme commences on:

1 July 2009.

Relevant facts and circumstances

The employer is located in X.

The employer has supplied distance details of employer locations.

The employer has provided the subsidised accommodation for their employees.

The benefit has been provided under an arms length arrangement.

The employer is required to live in onsite accommodation.

The employer pays the employee a rental allowance.

The employee reimburses the employer the majority of the allowance.

The employer has stated that the benefit has not been provided under a non-arms length arrangement.

The employer has stated that the benefit was not provided for the purposes of enabling the employer to obtain a benefit.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Section 58ZC,

Fringe Benefits Tax Assessment Act 1986 Paragraph 58ZC(2)(a),

Fringe Benefits Tax Assessment Act 1986 Paragraph 58ZC(2)(b),

Fringe Benefits Tax Assessment Act 1986 Paragraph 58ZC(2)(c),

Fringe Benefits Tax Assessment Act 1986 Paragraph 58ZC(2)(d),

Fringe Benefits Tax Assessment Act 1986 Subparagraph 58ZC(2)(d)(ii),

Fringe Benefits Tax Assessment Act 1986 Paragraph 58ZC(2)(e),

Fringe Benefits Tax Assessment Act 1986 Subsection 140(2),

Fringe Benefits Tax Assessment Act 1986 Paragraph 140(1)(a) and

Fringe Benefits Tax Assessment Act 1986 Paragraph 140(1)(b).

Summary

The taxpayer qualifies for the remote area housing benefit because it fulfils the conditions outlined in subsection 58ZC(2) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)

Detailed reasoning

Subsection 58ZC(2) of the FBTAA requires the following conditions to be satisfied before a housing benefit provided in respect of an employee's employment in a remote area can qualify as an exempt 'remote area housing benefit':

(2) A housing benefit in relation to an employer for a year of tax and for a unit of accommodation, being a benefit provided to an employee of the employer in respect of the employee's employment, is a remote area housing benefit if:

(a) during the whole of the tenancy period, the unit of accommodation was located in a State or internal Territory and was not at a location in, or adjacent to, an eligible urban area; and

(b) during the whole of the tenancy period, the recipient was a current employee of the employer and the usual place of employment of the recipient was not at a location in, or adjacent to, an eligible urban area; and

(c) (Repealed by No 77 of 2005)

(d) it would be concluded that it was necessary for the employer, during the year of tax, to provide, or to arrange for the provision of, residential accommodation for employees of the employer because:

(i) the nature of the employer's business was such that employees of the employer were liable to be frequently required to change their places of residence; or

(ii) there was not, at or near the place or places at which the employees of the employer were employed, sufficient suitable residential accommodation for those employees (other than residential accommodation provided by or on behalf of the

employer); or

(iii) it is customary for employers in the industry in which the recipient was employed during the tenancy period to provide residential accommodation for their employees free of charge or for a rent or other consideration that is less than the market value of the right to occupy or use the accommodation concerned; and

(e) the recipients overall housing right was not granted to the recipient under:

(i) a non-arm's length arrangement; or

(ii) an arrangement that was entered into by any of the parties to the arrangement for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of this section.

Remote area housing benefits are addressed in Law Administration Practice Statement 2000/6, Fringe benefits tax: what is considered to be remote for the purposes of the remote area housing benefit.

According to paragraph 58ZC(2)(a) of the FBTAA a unit of accommodation will be treated as being in a remote area if it is not in or adjacent to an eligible urban area.

Paragraph 140(1)(b) of the FBTAA, which relates to housing benefits provided to most employees, defines a location that is adjacent to an eligible urban area to be either:

(i) situated less than 40 kilometres, by the shortest practicable surface route, from the centre point of an eligible urban area with a census population of less than 130,000, or

(ii) situated less than 100 kilometres, by the shortest practicable surface route, from the centre point of an eligible urban area with a census population of at least 130,000.

Consequently, a location will be in a remote area (and not near an eligible urban area) where it is:

· 40 kilometres or more from a town or city with a census population of14,000 or more, if that town is not in Zone A or B for Income Tax purposes

· 40 kilometres or more from a town or city with a census population of 28,000 or more, if that town is in Zone A or B for Income Tax purposes, and

· 100 kilometres or more from a town or city with a census population of130,000 or more.

The employer has stated the following:

· The employer's accommodation is located in an area in X.

PS LA 2000/6 provides a list of locations that the Australian Tax Office considers to be remote/non-remote under paragraph 140(1)(b) of the FBTAA. The location of X is not on this list therefore the criteria under paragraph 140(1)(b) of the FBTAA will be considered to determine whether or not X is considered remote.

The following facts are relevant:

· according to Google Maps Route Planner, the employer's accommodation is located:

o more than 100 km from Y which is a city with a census population of 130,000 or more.

o more than 40 km from other towns or cities with census populations between 14,000 and 130,000 and are eligible urban areas according to PS LA 2000/6.

The shortest practicable surface route should ideally be calculated according to the 1986 road maps, however, due to the difficulties in obtaining such maps and the fact that the location in question is clearly located outside the relevant distances from eligible urban areas it is acceptable to use current road maps.

Therefore, it is accepted that the employer is in a remote area.

Paragraph 58ZC(2)(a) of the FBTAA

Paragraph 58ZC(2)(a) of the FBTAA is met as the unit of accommodation is located at the employer's accommodation at X which is located in a State and is not located in, or adjacent to, an eligible urban area.

Paragraph 58ZC(2)(b) of the FBTAA

Paragraph 58ZC(2)(b) of the FBTAA is met as the employer has stated that during the whole tenancy period, the recipient was a current employee of the employer and the usual place of employment of the recipient was not at a location in, or adjacent to, an eligible urban area.

Subparagraph 58ZC(2)(d)(ii) of the FBTAA

Subparagraph 58ZC(2)(d)(ii) of the FBTAA is met as the employer has stated that in the area where the employee's are employed there is insufficient suitable residential accommodation available.

Paragraph 58ZC(2)(e) of the FBTAA

Paragraph 58ZC(2)(e) of the FBTAA is satisfied as the employer has stated that the recipients overall housing right was not granted to the recipient under a non-arm's length arrangement or an arrangement that was entered into by any of the parties to the arrangement for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of this section.

Conclusion

The employer fulfils the conditions outlined in subsection 58ZC(2) of the FBTAA and therefore qualifies for remote area housing benefits.

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