Edited version of your written advice

Authorisation Number: 1012797424447

Ruling

Subject: Living away from home allowance vs. travel allowance Question 1a

If the Employees are travelling in the course of performing the duties of their employment and their Australian employer pays for the accommodation for the employees, is the provision of accommodation a fringe benefit provided by their Australian employer?

Answer

N/A- LAFH

Question 1b

If the provision of the accommodation is a fringe benefit provided by the Australian employer, does the otherwise deductible rule in section 52 of the FBTAA 1986 apply to reduce the taxable value of the fringe benefit to nil?

Answer

No

Question 2a

Where the cost of meals and other expenses incidental to the travel are reimburse by the employer, is the reimbursement of these costs a fringe benefit?

Answer

Yes

Question 2b

If the reimbursement of the cost of meals and other expenses incidental to travel are reimbursed by the employer, does the otherwise deductible rule in section 24 of the FBTAA 1986 reduce the taxable value of the benefit to nil?

Answer

No

Question 3

Where a per diem is paid to an employee, is the per diem subject to section 30 of the FBTAA 1986?

Answer

No

Question 4a

Is the provision of travel to and from Australia and the Client Site at the beginning and the end of the project a fringe benefit?

Answer

No

Question 4b

If the provision of travel to and from Australia and the Client Site at the beginning and the end of the project is a fringe benefit, does the otherwise deductible rule in section 52 of the FBTAA reduce the taxable value of the benefit to nil?

Answer

N/A

This ruling applies for the following periods:

Fringe benefits tax year ended 31 March 20XX

The scheme commences on

1 April 20XX

Relevant facts and circumstances

The employer employs highly-skilled maintenance employees. Employees travel domestically and overseas frequently.

Once the Employees have reached the Client Site, they remain there until the necessary work has been completed.

The employees work for up to ten hours a day, six days a week and do not take annual leave or vacations while at the Client Site.

The typical continuous period an Employee will be at Client Sites for is around eight weeks, however, in some instances there may be delay, which lead to the Employee being at Client Sites for a longer period:

• Are provided with accommodation by the employer. The accommodation is usually a hotel and not a serviced apartment. The Employee does not have a choice in relation to the accommodation to be provided;

• Are either paid a per-diem allowance by employer to cover the cost of reasonable and fair food and Incidental expenses or reimbursed expenses while working at the Client Site;

• Are not accompanied by family while working at the Client Site;

• Maintain their usual place of residence and living arrangements in Australia; and

• Do not take annual leave and are not provided with home leave flights due to the short period of time that they working at the Client Site.

Upon completing the servicing of the machines, the employees return to Australia.

Scenarios considered in this ruling:

Scenario A (Employee A)

Employee A had 4 trips overseas, to different locations, of varying durations.

Scenario B (Employee B)

Employee B had 4 trips overseas, to different locations, of varying durations.

Scenario C (Employee C)

Employee C had 2 trips overseas, to different locations, of varying durations.

Scenario D (Employee D)

Employee D had 4 trips overseas but only to two different locations. The trips were of various durations.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986

Section 20

Section 24

Section 30

Section 31C

Section 31D

Section 31F

Section 31H

Subsection 47(5)

Subsection 47(7)

Paragraph 47(7)(c)

Section 52

Section 58F

Paragraph 58F(b)

Subsection 136(1)

Section 143A

Income Tax Assessment Act

1997 Section 8-1

Reasons for decision

General

In order to determine the taxation consequences of the accommodation, and travel provided to the employees, and either the reimbursement or the per diem provide to the employees to cover the cost of meals and incidental incurred by the employees whilst working overseas, it is necessary to considered whether the employees are living away from his or her usual place of residence or travelling in the course of performing the duties of that employment.

Some guidance is provided in Miscellaneous Taxation Ruling MT 2030 where it addresses the issue of the distinction between travelling and living away from home allowances. Paragraphs 35 to 43 of MT2030 outline various factors that may be considered in making the distinction.

Paragraph 38 of MT 2030 states the following:

A living-away-from-home allowance is paid where the employee has moved and taken up temporary residence away from his or her usual place of residence so as to be able to carry out employment duties for a time at the new (but temporary) workplace. A travelling allowance, on the other hand, is paid because the employee is travelling in the course of performing his or her job. In the former case, there is a change of job location and actually change of residence to a place at or near that location. In the latter, the employee does not change job locations but simply travels in order to carry out the requirements of the job.

Paragraphs 39 to 41 of MT2030 refer to length of time that the employee is away from home:

Travelling allowances are often paid for comparatively short periods, exceptions being allowances where the employment is inherently itinerant in nature or where travelling is regular incident of the occupation ...

...The nature of the allowance is not to be determined by reference solely to the period for which it is paid. As mentioned, a travelling allowance might be paid to a commercial traveller almost continuously throughout the year whereas another employee may receive a living-away-from home allowance only for a month or so.

There will be circumstances, however, when an employee is away from his or her home base for a brief period in which it may be difficult to conclude whether the employee is living away from home or travelling. As a practical general rule, where the period away does not exceed 21 days the allowance will be treated as a travelling allowance rather than a living-away-from-home allowance. For longer periods, it will be necessary to determine the nature of the allowance with the guidance provided by this Ruling.

All the employees were sent overseas to work by their employer between 2 and 4 times during the 2014 fringe benefits tax (FBT) year. Apart from employee D, none of the employees had more than one period of employment at the same overseas location during the FBT year and each period overseas was to a single location. The periods of employment varied, but were more than 21 days. The employees returned to their homes after each period overseas.

Taking into account MT 2030 and the circumstances of each employee, employee A, B, C and D, they are not considered to be travelling in the course of performing his or her duties of employment but are living away from his or her usual place of residence whilst in Australia.

Note: as the employees are considered to be living away from home and not traveling on business none of the benefits provided are an 'exclusive employee residual benefits' as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA).

The taxation consequences for Employees C and D may be slightly different to those of Employees A and B if:

• one of the locations they travelled to is considered remote, and

• if the Employee D can be considered as a fly-in fly-out employee with respect to his/her two trips to the same location.

In regards to whether a location overseas is a remote location subsection 47(7) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) was amended by Tax Laws Amendment (2011 Measures No. 6) Act 2011 to recognise some overseas locations as remote locations. The explanatory memorandum (EM) to Tax Laws Amendment (2011 Measures No. 6) Bill 2011 states that in deciding whether or not a location overseas is considered a remote location regards are had to comparable Australian standards:

• the distance and time it takes to travel from the worksite to the nearest urban area

• the population of the nearest urban area

• accessibility of the overseas site

• safety and the crime rate, adequacy of local law enforcement, or health risks in the surrounding areas to the worksite (and whether the nearest urban area is reasonably safe if adequate precautions are taken, the ability to take safety precautions)

• location of the worksite relative to the arrival destination in the foreign country (for example, an international airport)

• the quality of the roads between the nearest urban area and the worksite, and

• amenities and facilities available at the nearest urban area (in close proximity to the worksite).

Having regard to the above factors, in particular that the location that maybe considered a remote location a with a population of more than 250,000, and is less than 100 kilometres away from a city, which has a population of well over a million and an international airport, that location is not considered to be a remote location.

Therefore, subsection 47(7) of the FBTAA and the principles in the Roads and traffic Authority of NSW v FC of T 93 ACT 4508; 26ATR 76 court case (Roads and Traffic Authority), which rely on the employee working in a remote location, can have no application to Employee C or D. Naturally as Employees A and B also do not travel overseas to a remote location Roads and Traffic Authority can have no application in Employee A or B's situation.

Note employee D is not a fly-in fly-out employee as he or she does not satisfy paragraph 47(7)(c) of the FBTAA.

Paragraph 47(7)(c) states:

the employee, on a regular basis:

(i) works for a number of days and has a number of days off; and

(ii) on completion of the working days, travels from that usual place of employment to his or her usual place of residence and, on completion of the days off, returns from his or her usual place of residence to that usual place of employment; and

Therefore, the taxation consequences of the accommodation, travel, and incidental expenses (including meals) will be the same for each of the employees, employee A, B, C and D. In order to determine whether the employer can apply the otherwise deductible rule in either section 24 or section 52 of the FBTAA we need to firstly determine whether the provision of flights, accommodation, meals and other incidentals are fringe benefits.

The definition of a benefit is broad and includes any right, privilege, service or facility. Therefore the provision of the transport, accommodation, accommodation and incidentals by the employer are benefits.

A benefit will be a fringe benefit as defined in subsection 136(1) of the FBTAA if it has been provided to an employee or an associate of an employee, in respect of the employee's employment by an employer, an associate of an employer or a third party under an arrangement with an employer. Additionally, the benefit is not excluded on the basis that it is an exempt benefit.

The definition of an employee and the definition of an employer in subsection 136(1) of the FBTAA are based on the payment or liability to pay salary or wages:

• current employee means a person who receives, or is entitled to receive salary or wages ...

• current employer means a person...who pays, or is liable to pay, salary or wages

Salary or wages is 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; and

…

It is not in doubt that the employer is an employer and is providing benefits to its employees.

As the employer provides the flights, and accommodation directly and meals, and other incidentals are provided by way of reimbursement or a per diem, it is accepted that these benefits are provided in respect of the employee's employment as there is a material connection with his or her employment.

Therefore benefits provided in respect of flights, accommodation, meals and other incidentals will be fringe benefits unless they are excluded on the basis that they are exempt benefits.

If they are exempt benefits there is no need to consider the otherwise deductible rule under either section 24 or section 52 of the FBTAA, as the benefits are not fringe benefits and hence have no taxable value.

Secondly if the benefits are fringe benefits for the otherwise deductible rule to apply, the employee must be entitled to a deduction for the expenses under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997), had the employee incurred the expenses.

The general deduction provisions allow a deduction for all losses and outgoings to the extent which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature.

A number of significant court decisions have determined that for an expense to be an allowable deduction:

• it must have the essential character of an outgoing incurred in gaining Page 5 of 12 assessable income or, in other words, of an income-producing expense (Lunney v. FC of T; (1958) 100 CLR 478 (Lunney's case)),

• there must be a nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of assessable income (Ronpibon Tin NL v. FC of T, (1949) 78 CLR 47), and

• it is necessary to determine the connection between the particular outgoing and the operations or activities by which the taxpayer most directly gains or produces his or her assessable income (Charles Moore Co (WA) Pty Ltd v. FC of T, (1956) 95 CLR 344; FC of T v. Hatchett, 71 ATC 4184).

Expenditure on the daily necessities of life (for example, accommodation, food and drink) is generally not deductible as it is not incurred in gaining or producing assessable income and is also considered to be private or domestic in nature. In this case the other incidental expenses (telephone calls, laundry etc.) would also be private or domestic in nature and non-deductible.

An exception to this would be if the employee was undertaking work related travel and are required to stay away overnight. However as mentioned above we have determined that the employee was not travelling. Consequently, the employee would not be entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997.

There can be situations where the cost of accommodation may be deductible even where an employee is not travelling, such as in the Roads and Traffic Authority (NSW) v. Federal Commissioner of Taxation (1993) 43FCR 223; (1993) 26 ATR 76; (1993) 93 ATC 4508 (RTA case). However as mentioned above we have determined that the RTA case has no application.

Therefore since the employee would not be entitled to claim a deduction, the otherwise deductible rule in section 24 or section 52 of the FBTAA can have no application.

Question 1a

Summary

The accommodation provided to the employees are benefits but not fringe benefits, because the benefits are exempted under subsection 47(5) of the FBTAA.

Detailed reasoning

It has been determined above that the employees are not travelling in the course of performing their duties for their employer, but are living away from home.

The employee is provided with accommodation by way of a residual benefit.

The provision of accommodation will be exempt under section 47(5) of the FBTAA if the employee satisfies sections 31C and 31D of the FBTAA about maintaining an Australian home.

As stated above subsection 47(5) of the FBTAA will have application if the employees are able to satisfy sections 31C and 31D.

Subsection 47(5) states:

Where:

(a) a residual benefit consisting of the subsistence, during a year of tax, of a lease or licence in respect of a unit of accommodation is provided to an employee of an employer in respect of his or her employment; and

(b) the unit of accommodation is for the accommodation of eligible family members and is provided solely because the duties of that employment require the employee to live away from his or her normal residence; and

(ba) the employee satisfies:

(i) sections 31C (about maintaining an Australian home) and 31D (about the first 12 months); or

(ii) section 31E (about fly-in fly-out and drive-in drive-out requirements); and

(c) the accommodation is not provided while the employee is undertaking travel in the course of performing the duties of that employment; and

(d) any of the following conditions is satisfied:

(i) subsection (7) applies in relation to the provision of transport for the employee in connection with travel in the period in the year of tax when the lease or licence subsisted, being travel between the employee's usual place of residence and the employee's usual place of employment;

(ii) if the employee satisfies sections 31C and 31D - the employee gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, purporting to set out the matters in subparagraphs 31F(1)(a)(i) to (iii);

(iii) if the employee satisfies section 31E - the employee gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, purporting to set out the matters in subparagraphs 31F(1)(b)(i) to (iii);

the benefit is an exempt benefit in relation to the year of tax.

Section 31C states:

The employee satisfies this section if:

(a) the place in Australia where the employee usually resides when in Australia:

(i) is a unit of accommodation in which the employee or the employee's spouse has an ownership interest (within the meaning of the Income Tax Assessment Act 1997); and

(ii) continues to be available for the employee's immediate use and enjoyment during the period that the duties of that employment require the employee to live away from it; and

(b) it is reasonable to expect that the employee will resume living at that place when that period ends.

Subsection 31D(1) states:

The employee satisfies this section if the fringe benefit relates only to all or part of the first 12 months that the duties of that employment require the employee to live away from the place in Australia where he or she usually resides when in Australia.

Subsection 31D(2) states:

Each of the following paragraphs applies for the purposes of subsection (1):

(a) the employer may pause the 12-month period;

(b) start a separate 12-month period if:

(i) the employer later requires the employee to live at another location for the purposes of that employment; and

(ii) (ii) it would be unreasonable to expect the employee to commute to that other location from an earlier location for which the employer provided a benefit of the same kind to the employee;

(c) other changes in the nature of that employment are irrelevant;

(d) treat as one employer any of the employee's earlier employers that is or has been an associate of the current employer.

Subsection 31F(1) states:

The employee satisfies this section if the employee gives the employer a declaration, in a form approved by the Commissioner, purporting to set out:

(a) for a fringe benefit to which section 31 (about employees who maintain an Australian home) applies:

(i) the address of the place in Australia where the employee usually resides when in Australia; and

(ii) that section 31C is satisfied for that place; and

(iii) the address of each place where the employee actually resided during the period to which the benefit relates; or

...

Each employee has a home in Australia which they maintain and their family resides their whilst they are working overseas and they return their after each period working overseas. Each secondment overseas except for employee D, is to a different location for a period of less than 12 months. With regards to employee D he does go to 2 locations twice but the total period at each location is again less than 12 months.

Therefore, on the assumption, which you asked us to make in your ruling request, that the required declaration under subsection 31F(1) of the FBTAA is provided, sections 31C and 31D are satisfied Edited version of private ruling Page 7 of 12 for each employee. The accommodation provided by way of a residual benefit is therefore an exempt benefit under subsection 47(5) of the FBTAA and will not give rise to a fringe benefit.

Question 1b

Due to the response to Question 1a a response to this question is not required.

Note: had the provision of accommodation given rise to a fringe benefit the taxable value of that benefit could not be reduced to nil under section 52 of the FBTAA as the employee would not have been entitle to a tax deduction had they paid for the accommodation. See the explanation of the otherwise deductible rule above.

Question 2a

Summary

The reimbursement of meal and other incidental expenses incurred by the employee are expense payment fringe benefits.

Detailed reasoning

The reimbursement by the employer of the meals and other incidental expenses incurred by the employees are expense payment benefits as defined in section 20 of the FBTAA Subsection 136(1) of the FBTAA states:

Expense payment benefit means a benefit referred to in section 20. Section 20 states:

Where a person (in this section referred to as the provider):

(a) makes a payment in discharge, in whole or in part, of an obligation of another person (in this section referred to as the recipient) to pay an amount to a third person in respect of expenditure incurred by the recipient; or

(b) reimburses another person (in this section also referred to as the recipient), in whole or in part, in respect of an amount of expenditure incurred by the recipient; the making of the payment referred to in paragraph (a), or the reimbursement referred to in paragraph (b), shall be taken to constitute the provision of a benefit by the provider to the recipient.

In this case paragraph (b) of the definition of expense payment benefit is satisfied, as the employer is reimbursing expenses incurred by the employees.

As stated earlier all the benefits provided by the employer are in respect of employment. Therefore expense payment benefits in question are expense payment fringe benefits.

Question 2b

Had the employer not provided the benefit, the employee would not have been able to claim a deduction under section 8-1 of the ITAA as the meal and other incidental expenses are private in nature. Therefore the taxable value of the expense payment fringe benefits cannot be reduced to nil under the otherwise deductible rule in section 24 of the FBTAA.

Detailed reasoning

As the expenses payments are fringe benefits the employer is required to determine the taxable value of the fringe benefits provided to the employee in respect of meals and other incidental expenses.

As previously mentioned where the otherwise deductible rule applies, the calculation of the taxable value of the fringe benefit is reduced by the hypothetical income tax deduction to which the employee would have been entitled had the employee incurred the expense.

We have already determined that the employee would not be entitled to claim an income tax deduction for the cost of food (meals) and other incidentals, which are reimbursed by the employer, as the expenses are private or domestic in nature. Therefore the taxable value of the fringe benefits cannot be reduced, under section 24 of the FBTAA. Therefore FBT is payable on the expense payment benefits.

Question 3

Summary

Where a per diem (daily allowance) is paid to cover the cost of meals and incidentals (telephone calls, laundry etc.) whilst the employee is employee is living away from his or her usual residence, the per diem will be a living-away-from-home allowance (LAFHA), and subject to section 30 of the FBTAA.

Detailed reasoning

Section 30 of the FBTAA applies to an allowance that is paid to an employee because he is required to living away from home in the course of his employment.

30(1) 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 duties of that employment require the employee to live away from his or her normal residence; 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.

As the per diem fits the definition of a living-away-from-home allowance in section in subsection 30(1) of the FBTAA it is subject to the provisions of Division 7 of the FBTAA dealing with living away from home allowance benefits.

The taxable value of the allowance is subject to section 31 of the FBTAA, if all the conditions in that section are satisfied.

Section 31 states:

Section 31(1) This section applies to a living-away-from-home allowance fringe benefit covered by subsection 30(1) in relation to a year of tax to the extent that the employee satisfies all of the following for the fringe benefit and the period to which it relates:

(a) section 31C (about maintaining an Australian home);

(b) section 31D (about the first 12 months);

(c) section 31F (about declarations).

31(2) Subject to this Part, the taxable value of the fringe benefit in relation to the year of tax is the amount of the fringe benefit reduced by:

(a) any exempt accommodation component; and

(b) any exempt food component.

31(3) Paragraph (2)(b) does not apply to the extent that the fringe benefit relates to a period during which the employee resumes living at his or her normal residence.

31(4) Neither paragraph (2)(a) nor (b) applies to the extent that the period to which the fringe benefit relates happens while the 12-month period referred to in subsection 31D(1) is paused.

Note: The employer may pause that 12-month period (see paragraph 31D(2)(a)).

It has previously been determined in relation to accommodation and subsection 47(5) of the FBTAA sections 31C and 31D are satisfied on the assumption that the required declaration under section 31F is provided. Therefore, the taxable value of the LAFHA can be reduced by any exempt food component.

The exempt food component is explained in section 31H.

31H(1) The exempt food component, in relation to a living-away-from-home allowance fringe benefit, is so much of the result of subsection (2) as is equal to the total of the expenses that:

(a) are incurred by the employee for food or drink for eligible family members during the period to which the fringe benefit relates; and

(b) if section 31G applies to the expenses - are substantiated under that section.

31H(2) Work out the result of the following:

Food component - Applicable statutory food total where:

applicable statutory food total means the total of the statutory food amounts for eligible family members for the period to which the fringe benefit relates, reduced (but not below zero) by any amount that:

(a) might reasonably be expected to be the total normal food or drink expenses for those eligible family members had they remained living in their normal residence during that period; and

(b) was taken into account in working out the food component.

Note: there is no reduction in the taxable value of a LAFHA for the incidental expenses covered by the allowance.

Question 4a

Summary

The provision of travel is not a fringe benefit because the benefit is exempt under section 58F of the FBTAA.

Detailed reasoning

In all 4 scenarios, the employee was provided with flights, by way of a residual benefit, to the overseas destination and upon return to the Australia at the end of the assignment.

The provision of residual benefits that are in respect of relocation transport are exempt benefits in accordance with section 58F of the FBTAA.

Section 58F of the FBTAA states:

Where:

(a) a car benefit, an expense payment benefit, a property benefit or a residual benefit is provided in, or in respect of, a year of tax in respect of the employment of an employee of an employer;

(b) the benefit is in respect of relocation transport; and

(c) in the case of an expense payment benefit:

(i) the benefit is not constituted by the reimbursement of the recipient, in whole or in part, in respect of an amount of a Division 28 car expense incurred by the recipient in relation to a car owned by, or leased to, the recipient, being a reimbursement calculated by reference to the distance travelled by the car; and

(ii) documentary evidence of the recipients expenditure is obtained by the recipient and that documentary evidence, or a copy, is given to the employer before the declaration date; the benefit is an exempt benefit in relation to the year of tax.

The relevant part of the exemption is paragraph 58F(b), relocation transport.

A benefit in respect of relocation transport is defined in section 143A of the FBTAA as follows:

For the purposes of this Act, where:

(h) any of the following benefits is provided in, or in respect of, a year of tax to an employee, or to an associate of an employee, in respect of employment of the employee:

(v) a car benefit relating to a particular car where the application or availability of the car is in respect of the provision of transport;

(vi) an expense payment benefit where the recipients expenditure is in respect of the provision of transport, or meals or accommodation in connection with transport;

(vii) a property benefit where the recipients property consists of meals in connection with transport;

(viii) a residual benefit where the recipients benefit consists of the provision of transport or accommodation in connection with transport;

(i) the transport, meals or accommodation is for a family member;

(j) the transport is required solely because:

(iv) the employee is required to live away from his or her usual place of residence in order to perform the duties of that employment;

(v) the employee, having lived away from his or her usual place of residence in order to perform the duties of that employment, is required to return to his or her usual place of residence;

(c) in order to perform those duties; or

(d) because the employee has ceased to perform those duties; or

(vi) the employee is required to change his or her usual place of residence in order to perform the duties of that employment;

(k) the transport is provided to enable a family member to:

(iv) if subparagraph (c)(i) applies - take up residence at or near the place where the employee performs the duties of that employment while living away from his or her usual place of residence;

(v) if subparagraph (c)(ii) applies - take up residence at the employee's usual place of residence; or

(vi) if subparagraph (c)(iii) applies - take up residence at the employee's new place of residence;

(l) if the transport is for the spouse, or a child, of the employee - the transport is not provided to enable the spouse or child to accompany the employee:

(iii) while the employee is undertaking travel in the course of performing the duties of that employment; and

(iv) where the circumstances referred to subsection 26-30(2) of the Income Tax Assessment Act 1997 do not apply; and

(m) if the transport is for the employee - the transport is not provided while the employee is undertaking travel in the course of performing the duties of that employment; and

(n) if subparagraph (c)(iii) applies - the benefit is not provided under a non-arm's length arrangement; the benefit shall be taken to be in respect of relocation transport.

We have established that the employee was provided with a residual benefit in respect of his or her employment in respect of the provision of flights (travel) and that the employees are not travelling in the course of their employment.

Therefore, the residual benefit provided in relation to the flight undertaken by the employee to travel overseas and the return flight to Australia at the end of the period of assignment is considered to be in respect of relocation transport.

Consequently, the residual benefit is an exempt benefit under section 58F of the FBTAA and is excluded from the definition of a fringe benefit.

Question 4b

As a consequence of the response to Question 4a which concluded that the flights (travel) are exempt under section 58F as it constitutes relocation transport, the otherwise deductible rule in section 52 of the FBTAA is not applicable.

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