Edited version of administratively binding advice

Authorisation Number: 1011827215106

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Advice

Subject: FBT - section 135X agreement

Question

Can the new employer use the records kept by the previous employer?

Answer: Yes

This ruling applies for the following period:

This agreement applies for the year ended 31 March 2012 and subsequent years in which employers would have been able to use the relevant records.

The scheme commences on:

1 July 2010

Relevant facts and circumstances

Your advice is based on the following facts.

On a certain date employees from a previous department were transferred to another department under the relevant Notice.

Prior to that date, the previous department:

· kept logbooks

· treated a year of tax as a base year of tax for the purposes of section 26 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)

· kept a register in relation to the value of car parking fringe benefits for the purpose of using the 12 week record keeping method in Subdivision D of Division 10A of the FBTAA

· treated benefits as exempt benefits under sections 58B, 58C or 58D of the FBTAA, as a result of the relocation of employees

· treated a benefit, in relation to trainees engaged under the Australian Traineeship System, as an exempt benefit under section 58C of the FBTAA

· treated fringe benefits relating to remote area home schemes under section 65A of the FBTAA as amortised fringe benefits

· kept recurring fringe benefits declarations.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Section 135S

Fringe Benefits Tax Assessment Act 1986 Section 135X

Reasons for decision

Section 135X of the FBTAA enables the Commissioner to enter into a written agreement with a State or Territory regarding the application of certain provisions in certain circumstances.

The Explanatory Memorandum to Taxation Laws Amendment Bill (No. 2) 2001 which inserted section 135X into the FBTAA stated the section had 2 objects:

· the first is to ensure the calculation of certain fringe benefits is not affected as a result of a break in the continuity of certain record keeping requirements solely because of a 'transitional event'

· the second is to preserve the character of certain benefits where the character would otherwise be lost because of a 'transitional event'.

Subsection 135X(2) of the FBTAA states a transitional event occurs if:

· a State or Territory makes a nomination under section 135S

· a State or Territory varies a nomination under section 135S

· a State or Territory revokes a nomination under section 135S, or

· a nominated State or Territory body ceases to exist.

Although technically the Notice did not result in any of these events occurring as the previous employer has not ceased to exist, the outcome is the same as if it had been abolished. That is, the employees were transferred to another nominated State or Territory body as part of a reorganisation that occurred under the Notice.

Therefore, in accordance with section 135X of the FBTAA the other nominated State or Territory body may:

· treat a year which would have been a log book year of tax for the previous department as a log book year for the purpose of using section 10 of the FBTAA to calculate the taxable value of a car fringe benefit;

· treat a year of tax that would have been a base year of tax for the previous department as a base year for the purpose of calculating the taxable value of a housing fringe benefit under section 26 of the FBTAA;

· treat a register that would have been a valid register for the previous department as a valid register for the purpose of using the 12 week record keeping method to calculate the value of car parking fringe benefits;

· treat a benefit relating to the relocation of an employee that would have been an exempt benefit for the previous department under sections 58B, 58C or 58D of the FBTAA as an exempt benefit;

· treat a benefit relating to trainees engaged under the Australian Traineeship System that would have been an exempt benefit for the previous department under section 58S of the FBTAA as an exempt benefit;

· use the end date which would have been used by the previous department for the purpose of calculating the amortisation of the taxable value of fringe benefits relating to a remote area home ownership scheme under section 65CA of the FBTAA; and

· use a recurring fringe benefit declaration which would have applied if the employer had not changed from the previous department to the nominated State or Territory bodies.

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