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Edited version of your private ruling
Authorisation Number: 1012499307074
Ruling
Subject: Fringe benefits tax, exempt benefits
Question 1
Would benefits provided to a participant performing duties at various workplaces be exempt benefits under subsection 57A(1) of the Fringe Benefits Tax Assessment Act 1986?
Answer
Yes
This ruling applies for the following periods:
Year ended 31 March 2014
The scheme commences on:
April 2013
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You are a public benevolent institution (PBI).
As part of the services you provide, you place participants at various work places.
You have provided the facts of that arrangement.
You are considering providing benefits to those participants.
Relevant legislative provisions
Fringe Benefits Tax Assessment Act 1986 subsection 57A(1)
Fringe Benefits Tax Assessment Act 1986 subsection 123C(1) and
Fringe Benefits Tax Assessment Act 1986 subsection 136(1).
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
Summary
Benefits provided to a participant would be exempt benefits under subsection 57A(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA). The exemption under subsection 57A(1) of the FBTAA will be capped at $30,000 grossed-up taxable value of per employee in as specified in subsection 5B(1E) of the FBTAA.
Detailed reasoning
You are considering providing benefits to apprentice/trainees as part of a salary sacrifice arrangement. Subsection 57A(1) of the FBTAA states:
Where the employer of an employee is a public benevolent institution endorsed under section 123C, a benefit provided in respect of the employment of the employee is an exempt benefit.
An employee is defined in subsection 136(1) of the FBTAA to mean:
(a) a current employee;
(b) a future employee; or
(c) a former employee.
A current employee means '…a person who receives, or is entitled to receive, salary or wages'.
As is applicable salary or wages are defined in subsection 136(1) to mean:
(a) a payment from which an amount must be withheld (even if the amount is not withheld) under a provision in Schedule 1 to the Taxation Administration Act 1953 listed in the table, to the extent that the payment is assessable income…
An employer is defined in subsection 136(1) to mean:
(a) a current employer;
(b) a future employer; and
(c) a former employer…
The definition of a current employer from subsection 136(1) is a person who:
· pays or
· is liable to pay
Salary or wages.
The phrase 'in respect of' in relation to the employment of an employee is defined in subsection 136(1) of the FBTAA to include 'by reason of, by virtue of, for or in relation directly or indirectly to, that employment'.
In J & G Knowles & Associates Pty Ltd v. Federal Commissioner of Taxation (2000) 96 FCR 402; 2000 ATC 4151; (2000) 44 ATR 22 it was noted that the term 'in respect of employment', includes benefits where
...there is a sufficient or material, rather than a, causal connection or relationship between the benefit and the employment...
The facts of the arrangement by which you place participants at other work places indicate that you are the employer of the participants.
Since you intend to provide benefits to the participants as part of a salary sacrifice arrangement such benefits would be in respect of their employment.
As you are a PBI that is endorsed under subsection 123C(1) of the FBTAA, the benefits that you provide to an apprentice/trainee will be exempt benefits under subsection 57A(1) of the FBTAA.
The exemption under subsection 57A(1) of the FBTAA will be capped at $30,000 grossed-up taxable value of per employee in as specified in subsection 5B(1E) of the FBTAA.
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