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Edited version of your written advice

Authorisation Number: 1012789876440

Ruling

Subject: Fringe benefits tax: living-away-from-home allowance

Question 1

Do the employees satisfy the requirements to be fly-in fly-out and drive-in drive-out employees in section 31E of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

Yes

Question 2

Is the accommodation provided to the employees while they are working at the worksite an exempt benefit under subsection 47(5) of the FBTAA?

Answer

Yes

Question 3

Is the food allowance a living-away-from-home allowance (LAFHA) pursuant to subsection 30(1) of the FBTAA?

Answer

Yes

This ruling applies for the following periods:

1 April 2014 to 31 March 2015

1 April 2015 to 31 March 2016

1 April 2016 to 31 March 2017

1 April 2017 to 31 March 2018

1 April 2018 to 31 March 2019

The scheme commences on:

1 April 2014

Relevant facts and circumstances

Your operations are in a remote area.

The roads in and around the work site can be hazardous, especially after a long day of work.

Under a proposed arrangement employees will commute to and from the work site by personal vehicle at the beginning and end of their working roster.

The workforce is divided into two teams and each works a nine day roster.

For example:

Food allowance

Employees will be provided with a food allowance to meet the additional cost of food whist they are working at the worksite.

The food allowance will be calculated with reference to the ATO's reasonable food guidelines as released by the Commissioner annually and the allowance be apportioned for the number of meals it is intended to cover and prorated for days worked during a 7 day period.

You will require the employee to complete a declaration in a form approved by the Commissioner before the declaration date.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 subsection 30(1)

Fringe Benefits Tax Assessment Act 1986 section 31A

Fringe Benefits Tax Assessment Act 1986 section 31E

Fringe Benefits Tax Assessment Act 1986 section 45

Fringe Benefits Tax Assessment Act 1986 subsection 47(5)

Fringe Benefits Tax Assessment Act 1986 subsection 47(7)

Fringe Benefits Tax Assessment Act 1986 subsection 136(1)

Reasons for decision

1. Do the employees satisfy the requirements to be fly-in fly-out and drive-in drive-out employees in section 31E of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

In general terms, section 31E was inserted into the FBTAA as part of the measures that were introduced to limit the concessional tax treatment of living-away-from-home allowances and related benefits to a 12 month period for benefits provided to employees who:

However, the 12 month limit and the requirement to maintain a home in Australia do not apply where the employee satisfies the fly-in fly-out and drive-in drive-out requirements in section 31E of the FBTAA.

Section 31E of the FBTAA states:

These requirements were summarised in paragraph 1.48 of the revised Explanatory Memorandum to Tax Law Amendment (2012 measures No. 4) Bill 2012 which stated:

To determine whether these requirements are met it is necessary to consider the following questions:

ATO Interpretative Decision ATO ID 2013/43 provides some guidance on the phrase 'regular and rotational basis'.

ATO ID 2013/43 states:

Further guidance in relation to the meaning of the term 'irregular' is provided in Taxation ruling TR 2007/12 Fringe benefits tax: minor benefits in the context of the minor benefits exemption in section 58P of the FBTAA.

Paragraph 203 of TR 2007/12 refers to the Macquarie Dictionary meaning of 'irregular' as being 'not characterised by any fixed principle, method or rate'.

Paragraphs 24 to 129 of TR 2007/12 contain 13 examples that illustrate the application of the term 'irregular' in the context of section 58P. Examples 1 to 4 in paragraphs 24 to 64 in considering Christmas parties and/or gift indicate that a benefit provided every Christmas will be considered to be regularly provided. By contrast, benefits provided on an ad hoc basis are considered to be irregular.

In the situation being considered, the roster involves the employees working for eight days per fortnight in two different shifts.

As the employees work these shifts on an ongoing basis, it is agreed the employees work for a number of days, before having a number of days off on a regular basis.

It is also agreed that the shifts work on a rotational basis as the employees in Crew A have a four day break in week one and a two day break in week two, whereas the employees in Crew B have a two day break in week one and a four day break in week two. Additionally maintenance tasks that are not completed by one crew are completed by the other crew when they roster on for work. Therefore, the two crews operate on a rotational basis with one crew performing the duties on the days the other crew begins and ends their days off.

In the situation being considered Saturday and Sunday are always off days. However, in some weeks the employees will also have Monday off, but in other weeks the employees will also have Friday off.

Guidance for considering whether this difference in the off days is sufficient to conclude that the days are not the same in consecutive weeks was provided in the ATO response to agenda item 7 of the National Tax Liaison Group FBT sub-committee meeting held on 14 February 2013.

The issue and background to the agenda item were as follows:

The ATO response stated:

Further guidance is provided in the example in part 11.9 of Fringe benefits tax: a guide for employers which states:

In applying this guidance, it is accepted that the days on which the employees work will not be the same in consecutive weeks as in week one, the days worked are Monday to Thursday and in week two it is Tuesday to Friday.

The employees return to their normal residence on their days off.

The meaning of the phrase 'customary for employers in the industry' is discussed in Taxation Determination TD 94/97 Fringe benefits tax: what does the phrase 'customary for employers in the industry' mean in relation to the provision of fringe benefits to employees?

Paragraph 2 of TD 94/97 states:

To illustrate the principle TD 94/97 provides the following example after paragraph 5:

In considering the situation of your employees, the employees are engineers and technical staff who provide maintenance support. Given the necessity for these buildings to be maintained and operate each day of the week, it is accepted that it is customary for employees of that class or job description in the industry to work on a rotational basis.

Although employees in the class or job description who are employed by other employers in the industry may not be required to live away from home during their days on, this fact by itself does not mean it is not customary in the industry.

The situation of your employees can be compared to those in the example provided in TD 94/97. The situation in which your employees are employed is unique as the buildings are located in a remote area and it is not possible for the employees to commute between their normal residence and the work location on a daily basis. Further, the employees are not able to establish a normal residence near the employment location.

Consequently, in considering whether it is customary within the industry, it is necessary to disregard the practices of employers in the industry who operate in an area where it is possible for the employees to establish a normal residence within commuting distance of the employment location. By doing this, it is possible to accept that it is customary for employees in the class or job description within the industry to return home on their days off and live away from home on their days on.

Given the remote location in which the employees work, the hours of duty and the hazardous road conditions of the area it is unreasonable to expect the employees to travel to and from work and their normal residence on a daily basis.

In the circumstances it is reasonable to expect that the employees will resume living at their normal residence when their employment duties no longer require him or her to live away from home.

Conclusion

As all of the requirements are met, it is accepted that the employees satisfy the fly-in fly-out and drive-in drive-out requirements in section 31E of the FBTAA.

2. Is the accommodation provided to the employees while they are working at the worksite an exempt benefit under subsection 47(5) of the FBTAA?

The provision of accommodation to an employee will be a residual benefit under section 45 of the FBTAA where the unit of accommodation is not the employee's usual place of residence.

This residual benefit will be an exempt benefit when the requirements in subsection 47(5) of the FBTAA are met.

Subsection 47(5) of the FBTAA states:

In considering the application of this exemption it is necessary to consider the following questions:

(i) Did a residual benefit arise from the lease or licence to use a unit of accommodation?

A residual benefit will arise from the use of the unit of accommodation as it is not the employee's usual place of residence.

(ii) Is the unit of accommodation for the accommodation of family members?

The accommodation is provided to the employee who is a family member under the definition in subsection 136(1) of the FBTAA.

(iii) Is the employee a fly-in fly-out and drive-in drive-out employee?

As discussed above, the employee is a fly-in fly-out and drive-in drive-out employee.

(iv) Is the accommodation provided while the employee is undertaking travel in the course of performing the duties of employment?

During the period in which the accommodation is provided the employees are living away from home, rather than travelling.

(v) Does subsection 47(7) apply to the travel between the place of employment and usual place of residence, or will the relevant declaration be provided?

The relevant declaration will be provided.

Conclusion

As all of the requirements are met, the provision of accommodation to the employees will be an exempt benefit under subsection 47(5) of the FBTAA.

3. Is the food allowance a living-away-from-home allowance (LAFHA) pursuant to subsection 30(1) of the FBTAA?

Subsection 30(1) of the FBTAA sets out the circumstances in which an allowance will be a LAFHA.

Subsection 30(1) states:

In considering the application of this subsection to the allowance being paid it is necessary to consider the following questions:

In the circumstances it is agreed the food allowance is a LAFHA.

The valuation of the LAFHA

There are three different methods for valuing a LAFHA. The appropriate method depends upon whether the conditions in section 31 or 31A are met. If neither of these sections applies, the taxable value is calculated in accordance with section 31B.

Where the employee is a fly-in fly-out and drive-in drive-out employee the taxable value of the LAFHA will be determined in accordance with subsection 31A(2) provided the requirement that the employee has residential accommodation at or near his or her usual place of employment is met and the relevant declaration is provided.


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