Edited version of your written advice

Authorisation Number: 1012834268518

Date of advice: 6 July 2015

Ruling

Subject: Fringe benefits tax: Duties performed exclusively in or in connection with a public hospital

Question

Will a benefit provided in respect of the employment of the employees be an exempt benefit under subsection 57A(2) of the Fringe Benefits Tax Assessment Act 1986?

Answer

Yes, provided the employee is physically based at a location where the activities of a public hospital are being conducted and only performs duties in an area where hospital activities are being conducted.

This ruling applies for the following period:

1 April 2015 to 1 April 2018

The scheme commences on:

1 April 2015

Relevant facts and circumstances

The employer is a nominated State or Territory body under section 135S of the Fringe Benefits Tax Assessment Act 1986 which is responsible for the maintenance of all Government buildings.

Some of the buildings maintained by the employer are occupied by a public hospital.

The employees who are the subject of this Ruling provide trade services to the buildings that are occupied by a public hospital.

Some areas of the buildings in which the employees perform their duties are not used for hospital activities.

Assumptions

Nil

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Subsection 57A(2)

Fringe Benefits Tax Assessment Act 1986 Section 135S

Fringe Benefits Tax Assessment Act 1986 Subsection 135U(5)

Reasons for decision

Subsection 57A(2) of the Fringe Benefits Tax Assessment Act 1986 (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, subsection 57A(2) of the FBTAA provides that the exemption will apply if 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.

The two conditions are considered below.

Will a benefit provided in respect of the employment of the employees be an exempt benefit under subsection 57A(2) of the Fringe Benefits Tax Assessment Act 1986?

Is the employer a government body?

The employer of the employees who are the subject of this Ruling is a nominated State or Territory body under section 135S of the FBTAA.

As subsection 135U(5) of the FBTAA provides that a nominated State or Territory body will be taken to be a government body, the employer is a government body.

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?

To satisfy this test it is necessary for all of the duties of employment to be performed at the physical location of the hospital facility where the activities of the hospital are being conducted.

Guidance for determining whether the locations at which the employees who provide trade services are a location at which the activities of the hospital are being conducted is provided in paragraphs 48 to 51 of TD 2015/12. These paragraphs state:

48. Locations at a hospital facility such as a surgical theatre, a patient ward or a hospital administration office are recognisable as being places where the activities of a hospital are being conducted so that duties performed in such locations would be performed 'in' the hospital. However, for locations at a hospital facility such as a pathology collection room, general practitioner room or a vacant radiology room being refitted with new equipment, there may be uncertainty about whether these are places where the activities of the hospital are being conducted.

49. It would be acceptable when determining this matter to refer to a hospital's constituent documents or other informative material such as annual reports, local hospital network reports or hospital board minutes to identify a location at a hospital facility where activities of the hospital are being conducted.

50. For example, reference to these documents may show that a particular public hospital is required to provide or facilitate general practitioner services as a means of providing better targeted access to acute care emergency services. An employee who was performing duties in those general practitioner rooms within this public hospital facility would be performing duties 'in' the public hospital.

51. 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.

In applying this guidance, the duties will not be exclusively performed in a hospital if some of the duties are performed in a separate area of a hospital facility that is solely used for the employer's activities. For example, a workshop or a designated area used solely by the employer's employees. Therefore, for the exemption to apply, the employee must be physically based at a location of the hospital facility where activities of the hospital are being conducted.

Where this requirement is met and the site at which the employee performs his or her duties is only occupied by a public hospital, it is clear that an employee who provides trade services solely for that building will meet this requirement.

By contrast, if the site has a separate area that is used by an entity that is not a public hospital, the requirement will not be met if the employee performs duties of employment in that area.

Where a site is occupied by both a public hospital and an entity that is not a public hospital, there may be some areas of the site that are applicable to both entities. For example, a public entrance to the building, or the room that contains the air conditioning equipment for the building. In such a situation, the performance of duties in a common area will not prevent the exclusion from applying.

In summary, the exemption will apply when a benefit is provided to an employee who is based in a public hospital provided the employee does not perform any duties in an area at which hospital activities are not 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 or control of the hospital.

Are the duties of the employees performed such that they are exclusively engaged in duties that enable a hospital to carry out its functions?'

The information provided indicates the employer has responsibility for managing most building infrastructure owned or controlled by the Government. This includes all sites occupied by public hospitals. As such, the employees will not satisfy this test as their duties are not solely being undertaken for a public hospital. Rather, the duties are at least in part being undertaken to enable the employer to carry out its functions.

Conclusion

The employer is a government body and the duties of the employment of the employees who are the subject of this Ruling are exclusively performed in a public hospital if the employees are physically based in a public hospital and they do not undertake duties in an area where the activities of a public hospital are not undertaken.

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