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Edited version of your written advice
Authorisation Number: 1012822513313
Date of advice: 30 June 2015
Ruling
Subject: Fringe benefits tax: duties performed exclusively in or in connection with a hospital
Question
Will a benefit provided in respect of the employment of the be an exempt benefit under subsection 57A(2) of the Fringe Benefits Tax Assessment Act 1986?
Answer
No
This ruling applies for the following period:
1 April 2015 to 31 March 2016
Relevant facts and circumstances
The employer is a nominated State or Territory body under section 135S of the Fringe Benefits Tax Assessment Act 1986.
The employees are involved in the construction of a government building.
The employees were located on a floor of a building in which a public hospital operates.
During the period the employees moved to other accommodation located away from the hospital.
The employees attend as required, meetings at various non-hospital locations.
Relevant legislative provisions
Fringe Benefits Tax Assessment Act Subsection 57A(2)
Fringe Benefits Tax Assessment Act Section 135S
Fringe Benefits Tax Assessment Act Subsection 135U(5)
Fringe Benefits Tax Assessment Act Subsection 136(1)
Reasons for decision
Will a benefit provided in respect of the employment of the be an exempt benefit under subsection 57A(2) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?
Subsection 57A(2) of the FBTAA provides that a benefit provided to certain employees of a government body is an exempt benefit. It states:
57A(2) [Duties of employee relating to public hospital] Where:
(a) the employer of an employee is a government body; and
(b) the duties of the employment of the employee are exclusively performed in, or in connection with:
(i) a public hospital; or
(ii) a hospital carried on by a society or association that is a rebatable employer; …
a benefit provided in respect of the employment of the employee is an exempt benefit.
Therefore, in accordance with subsection 57A(2) of the FBTAA, the exemption will apply where the following two conditions are satisfied.:
1. the employer is a government body; and
2. the duties of the employment are exclusively performed:
• in a public hospital, or
• in connection with a public hospital.
These two conditions are considered below.
Is the employer a government body?
As the employer is a nominated state or territory body, it is agreed that the employer is a government body under subsection 135U(5) of the FBTAA.
Are the duties of the employment of the employees exclusively performed in a public hospital, or exclusively performed in connection with a public hospital?
Taxation Determination TD 2015/12 Fringe benefits tax: when are the duties of the employment of an employee of an employer who is a government body exclusively performed in, or in connection with, a public hospital or a hospital carried on by a society or association that is a rebatable employer? (TD 2015/12) provides guidance in determining whether duties of the employment of an employee of an employer who is a government body are exclusively performed in, or in connection with, a public hospital or a non-profit hospital.
Paragraph 2 of TD 2015/12 states:
The duties of the employment of an employee of an employer who is a government body are exclusively performed in, or in connection with, a public hospital … for the purposes of paragraph 57A(2)(b) when the duties of the employment of the employee satisfy any of the following tests:
• the duties are performed 'in' a hospital such that the employee performs their duties at the physical location of the hospital facility where the activities of the hospital are being conducted;
• the duties are performed 'in connection with' a hospital such that the employee performs their duties as a member of the hospital staff under the direction, management and control of the hospital board of management or chief executive officer; or
• the duties are performed 'in connection with' a hospital such that the employee is engaged in duties that enable the hospital to carry out its functions.
Therefore, a benefit provided in respect of the employment of the employees who are the subject of this Ruling will be an exempt benefit under subsection 57A(2) of the FBTAA if their duties are performed:
a. exclusively at the physical location of a hospital facility where the activities of the hospital are being conducted;
b. exclusively as a member of the hospital staff under the direction, management and control of the hospital board of management or chief executive officer; or
c. such that they are exclusively engaged in duties that enable a hospital to carry out its functions.
These requirements are considered below.
Are the duties of the employees exclusively performed at the physical location of a hospital facility where the activities of the hospital are being conducted?
The employees who are the subject of this Ruling were located on one of the floors of a building located in a hospital site for part of the period being considered.
It is clear that since the change of work location, the duties have not been performed 'at a hospital facility where activities of the hospital are being conducted'.
In considering the period in which the employees were located on one of the floors of the existing hospital site, paragraph 50 of TD 2015/12 relevantly states:
A location such as a dedicated building, a separate floor or a room in a building at a hospital facility that is used by, for example, civil engineers and project managers during the construction of buildings and access roads for a new hospital is not a place at a hospital facility where activities of the hospital are being conducted.
Consistent with paragraph 50 of TD 2015/12, the employees will not be considered to have performed their duties at a hospital facility where the activities of the hospital are being conducted if the area that they were located on that floor was a separate or dedicated area.
Alternatively, even if they were not located in a separate area, it is noted that some of the duties of the employees are performed at sites which are not a physical location of a hospital facility where activities of the hospital are conducted.
Therefore, regardless of whether the area that the employees were located on the floor of the existing hospital was a separate or dedicated area, the duties cannot be said to be exclusively performed in a public hospital as the non-hospital locations are not locations where activities of the hospital are being conducted.
Are the duties of the employees exclusively performed as a member of the hospital staff under the direction, management and control of the hospital board of management or chief executive officer?
The employees who are the subject of this Ruling do not perform their duties under the direction, management and control of the hospital board of management or chief executive officer.
Are the duties of the employees exclusively performed such that they are engaged in duties that enable a hospital to carry out its functions?
The duties of the employees who are the subject of this Ruling are performed such that they are engaged in project and contract management activities in relation to the design and construction of government buildings. They are not performed such that they are engaged in duties that enable the hospital to carry out its functions
Summary
The duties of the employment of the employees who are the subject of this Ruling do not satisfy any of the three requirements as stated at paragraph 2 of TD 2015/12.
Conclusion
The employer is a government body, but the duties of the employment of the employees who are the subject of this Ruling are not exclusively performed in a public hospital, or in connection with a public hospital.
Therefore, a benefit provided in respect of the employment of the employees will not be an exempt benefit under subsection 57A(2) of the FBTAA.
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