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Edited version of your written advice
Authorisation Number: 1013120910908
Date of advice: 14 November 2016
Ruling
Subject: Fringe benefits tax: Housing benefits: Remote area housing
Question 1
For the purposes of subsection 140(1A) of the Fringe Benefits Tax Assessment Act 1986, is X situated less than 100km from an eligible urban area?
Answer
No
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 2019 to 31 March 2019
The scheme commences on:
1 April 2014
Relevant facts and circumstances
A Regional Employer provides employees with housing in X.
Y is the closest eligible urban area.
The housing provided in X by a Regional Employer may be exempt from fringe benefits tax if it is in a remote area.
X is not listed on the ATO website as being either a remote or a non-remote area.
Relevant legislative provisions
Fringe Benefits Tax Assessment Act 1986
Section 140
Paragraph 140(1)(a)
Paragraph 140(1)(b)
Subsection 140(1A)
Subsection 140(1D)
Subsection 140(2)
Reasons for decision
The concept of what is an 'eligible urban area' is necessary for determining whether an area is a remote area for the purposes of the Fringe Benefits Tax Assessment Act 1986 (FBTAA). Section 140 of the FBTAA sets out the criteria for what is an 'eligible urban area.'
Paragraph 140(1)(a) of the FBTAA provides that an 'eligible urban area' is a reference to an area that is an urban centre with a census population of not less than 14,000 (or 28,000 for an urban centre located in Zone A or B for income tax purposes).
Paragraph 140(1)(b) of the FBTAA, relates to housing benefits provided to most employees, and defines a location that is adjacent to an eligible urban area to be either:
(i) situated less than 40 kilometres, by the shortest practical surface route, from a centre point of an eligible urban area with a census population of less than 130,000; or
(ii) situated less than 100 kilometres, by the shortest practical surface route, from the centre point of an eligible urban area with a census population of at least 130,000.
The distances are to be measured by determining the shortest practical surface route available as at 24 June 1986 (being the commencement date of section 140 of the FBTAA).
Subsection 140(1A) of the FBTAA extends the exemption for remote area housing to particular regional employers. In accordance with subsection 140(1D) of the FBTAA, these regional employers include the applicant.
For these employers, an employee's housing will not be considered adjacent to an eligible urban area, where it is situated less than 40 kilometres via the shortest practical surface route from the centre point of an eligible urban area of less than 130,000 people.
For an eligible urban area of 130,000 or more people, an area adjacent to an eligible urban area will occur if it is within 100 kilometres via the shortest practical surface route from that eligible urban area's centre point.
Consequently, in relation to certain employees, a location will be in a remote area (and not adjacent to or in an eligible urban area), for the purposes of subsection 140(1A) of the FBTAA, where it is at least 100 kilometres from a town with a census population of 130,000 people or more.
The ATO website provides a list of what areas are considered to be remote for the purposes of the FBTAA. It is located at https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/In-detail/Exemptions-and-concessions/FBT---remote-areas/. List 2 provides those areas for certain regional employers of which the organisation is one.
In the list for X, Y is listed as an eligible urban area. It also provides a list of what towns are considered remote or non-remote; X is on neither of those lists.
Subsection 140(2) of the FBTAA provides that for the purposes of section 140 of the FBTAA the distance, by the shortest practicable surface route, between a location (the tested location) and the centre point of an eligible urban area is:
(a) where there is only one location within the eligible urban area from which distances between the eligible urban area and other places are usually measured - the distance, by the shortest practicable surface route, between the tested location and that location; …
The applicant used various electronic planning tools and determined that the distance from Y to X was at least 100 kilometres. Therefore, it is accepted that X is not in or adjacent to an eligible urban area for the purposes of section 140(1A) of the FBTAA.
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