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Edited version of your written advice

Authorisation Number: 1051445496412

Date of advice: 26 October 2018

Ruling

Subject: Fringe benefits tax – exempt residual benefits

Question

Is the provision of childcare to your employees under a salary sacrifice arrangement an exempt benefit under subsection 47(2) of the Fringe Benefits Assessment Act 1986 (FBTAA)?

Answer

Yes

This ruling applies for the following periods:

1 April 2017 – 31 March 20XX

1 April 2018 – 31 March 20XX

1 April 2019 – 31 March 20XX

1 April 2020 – 31 March 20XX

1 April 2021 – 31 March 20XX

1 April 2022 – 31 March 20XX

The scheme commences on:

20XX

Relevant facts and circumstances

You own and operate childcare centres. Each childcare centre is operated as a business, provides childcare to at least two children under the age of six years old and is open to the general public as well as employees.

The provision of childcare is provided to current your employees under a salary sacrifice arrangement. Your employees do not incur the child care fees.

You had a private ruling stating that the provision of childcare in these child care facilities under a salary sacrifice arrangement is an exempt benefit under subsection 47(2) of the FBTAA. You have confirmed that the facts of the arrangement have not changed.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 section 45

Fringe Benefits Tax Assessment Act 1986 subsection 47(2)

Fringe Benefits Tax Assessment Act 1986 subsection 136(1)

Reasons for decision

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

Summary

The provision of childcare to your employees at one of your child care centres is an exempt benefit under subsection 47(2).

Detailed reasoning

Subsection 47(2) provides that:

The benefit provided must be a residual benefit which according to section 45 '…is a benefit that … is not a benefit by virtue of a provision of Subdivision A of Divisions 2 to 11 (inclusive)...'.

The provision of childcare to employees does not fit within any of the specific benefits in Divisions 2 to 11. Therefore, it is considered to be a residual benefit.

Subsection 136(1) defines a child-care facility:

You own and operate childcare centres that cater for more than two children under the age of six and therefore meet the definition of a child-care facility.

As the residual benefits involve the care of children in a childcare facility paragraph 47(2)(a) is satisfied.

To satisfy paragraph 47(2)(b) the centres must be located at your business premises. Paragraph 12 of Taxation Ruling TR 2000/4 Fringe benefits tax: meaning of ‘business premises’, provides guidance concerning the two requirements that must be satisfied for premises to be classified as business premises of the employer. These requirements are:

The childcare centres are located on premises that you own and their operation is part of your business operations, therefore they are located at your business premises.

As all of the conditions in subsection 47(2) are satisfied the provision of childcare to your employees at the childcare centres is an exempt benefit.


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