Edited version of your written advice

Authorisation Number: 1051387499328

Date of advice: 21 June 2018

Ruling

Subject: Fringe benefits tax - exempt benefits - other exempt benefits

Question

Would Migration Agent fees associated with the preparation and submission of a visa application for an employee who is relocating from overseas to work in Australia for the employer be fringe benefits tax exempt?

Answer

Yes

This ruling applies for the following period:

Year ended 31 March 2018

The scheme commences on:

1 April 2017

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

The employer employs foreign workers and pays for costs associated with bringing them to Australia to work on a temporary working visa.

The employer pays for all of the following expenses related to visa applications:

● Visa application fees to the Department of Immigration

● Health checks

● Police checks

● Legal fees

● Agent and migration agent fees

The Migration Agent fees invoice was issued to the employer and not the employee.

The employee was not living in Australia at the time the job was offered to the employee.

The employee will relocate and live in Australia to perform their duties of employment with the employer after the visa is granted.

Transport is also provided to the employee’s family members on the same basis.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986, section 58F

Fringe Benefits Tax Assessment Act 1986, section 142A

Fringe Benefits Tax Assessment Act 1986, section 143A

Reasons for decision

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

All references made in these reasons for decision are to the Fringe Benefits Tax Assessment Act 1986 unless otherwise stated.

Summary

Where the employer pays the Migration Agent fees associated with the preparation and submission of a visa application for an employee who is relocating from overseas to work in Australia, the benefit is an exempt benefit in accordance with section 58F.

Detailed reasoning

Section 58F provides that:

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 benefit is a residual benefit because the employer has been invoiced for the Migration Agent fees they incurred in preparing and submitting a visa application. As the employer has incurred this expense to enable the employee to relocate to Australia in order to perform the duties of their employment the residual benefit is in respect of the employee’s employment. Therefore paragraph 58F(a) is satisfied.

Paragraph 58F(b) will be satisfied if that benefit is in respect of relocation transport. The circumstances in which a benefit will be treated as a benefit in respect of relocation transport are specified in section 143A:

For the purposes of this Act, where:

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

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

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

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

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

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

(c) the transport is required solely because:

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

(ii) 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:

(A) in order to perform those duties; or

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

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

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

(i) 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;

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

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

(e) 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:

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

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

(f) 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

(g) 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.

Subsection 142A(1) provides that:

For the purposes of this Act, recipients expenditure that is in respect of, or a recipients benefit that consists of:

(a) accident insurance, airport or departure tax, passenger movement charge, a passport, a visa or a vaccination; or

(b) any similar matter or thing;

in connection with transport shall be taken to be in respect of the provision of, or to consist of, transport.

According to this section where the employee’s benefit consists of a visa or any similar matter or thing in connection with transport, it shall be taken to be in respect of the provision of, or consist of, transport.

The meaning of the phrase 'in connection with' was discussed in Burswood Management Ltd v. Attorney-General (1990) 23 FCR 144. In a joint decision the court said:

The words 'in connection with' are words of wide import; and the meaning to be attributed to them depends on their context and the purpose of the statute in which they appear.

It is considered that, with respect to paragraph 142A(1)(b), the items of expenditure and related costs can be read quite widely. The employer has paid for a Migration Agent to assist in obtaining the relevant visa for the employee. The visa enabled the employee to travel to Australia to commence employment with the employer. The payment of the Migration Agent fees is in connection with the employee’s transport therefore it is taken to be in respect of the provision of transport.

As the transport is provided to the employee and their family in order for the employee to travel to Australia and commence performing the duties of their employment in Australia, the requirements of section 143A are satisfied and the benefit is considered to be provided in respect of relocation transport. Therefore paragraph 58F(b) is satisfied.

The benefit is not an expense payment benefit, so there is no requirement to consider paragraph 58F(c).

The requirements of section 58F are satisfied therefore the provision of the residual benefit by way of payment of the Migration Agent fees is an exempt benefit in accordance with section 58F.

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